With effect from 1 April 2017, the National Living Wage rate will rise by 30p an hour to £7.50 an hour. This applies to all workers aged 25 or over.
In addition to the increased National Living Wage, the following increases to the National Minimum Wage rates will also apply:
• 21 to 24 year-olds will increase by 10p to £7.05 an hour;
• 18 to 20 year-olds will increase by 5p to £5.60 an hour;
• 16 to 17 year-olds will increase by 5p to £4.05 an hour;
• Apprentices aged under 19 (or 19 or over in the first year of their apprenticeship) will increase by 10p to £3.50 an hour.
Employers therefore need to prepare for these changes and ensure that they write to workers to inform them of their new rate of pay. NB: All national wage rates will increase on an annual basis (on the 1st April of each year) going forward.
Who is entitled to the National Minimum Wage?
Almost everyone who works in the UK is legally entitled to be paid the National Minimum Wage. This is the case even if a worker or employee signs a contract that says they are entitled to a lower rate of pay. It isn’t necessary to be in full-time employment or to work at an employer’s premises. For example you are entitled to receive the National Minimum Wage if you are;
• Employed by an agency
• An apprentice
• A home-worker
• A part-time worker
• A casual worker
• A pieceworker
• A worker on a short term contract
• Foreign workers
• Offshore workers
However, you are not entitled to receive the National Minimum Wage if you are:
• A worker under school leaving age (i.e. not turned 16 by the last Friday in June of any school)
• Genuinely self-employed
• An au pair
• In the armed services
• A voluntary worker
How can you ensure compliance with the National Minimum Wage rates?
As an employer you are legally required to keep sufficient records to show you are paying your workers at least the NMW for the hours they work. For many employers, existing payroll and business records will be sufficient and there will be no need to maintain separate records. For example, where employees are paid at an hourly rate for hours worked it will be easy to demonstrate through records that the National Minimum Wage has been paid. However, where salaried staff are contracted to work a certain number of hours each week, care should be taken to ensure and to be able to evidence that if additional hours are worked this does not mean they receive less than the National Minimum Wage.
How is the National Minimum Wage enforced?
It is a criminal offence for employers to not pay the correct national wage rates or to falsify pay records. An employee may therefore pursue a complaint by putting a claim into an Employment Tribunal for unlawful deductions from wages. This is because the right to receive the National Minimum Wage is implied into all employees’ contracts of employment.
An employee or worker may also make a complaint to the Pay and Work Rights Helpline who can then put a complaint into the HMRC. A compliance officer in the department for the National Minimum Wage will then undertake a full investigation into the Employer’s pay records. The HMRC are then able to order the Employer to pay arrears to the employee and if the employer fails to do so, the HMRC can bring a case to an Employment Tribunal or civil court on the employee’s behalf to recover the money. Employees are entitled to have any arrears paid at the current NMW rate, if it is higher than the rate in force when the arrears came about.
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