60 second guide: to the national minimum wage

The NMW is applicable to almost all workers in the UK (but not the self-employed). There are currently three age-based rates (as well as separate rates for apprentices). The rates are revised in October each year. They are: Workers aged 21 years or more: £6.31 per hour Workers aged 18 to 20 inclusive: £5.03 per hour Workers aged under 18 (but above compulsory school age): £3.72 per hour Apprentices aged under 19: £2.68 per hour Apprentices aged 19 and over, but in the first year of their apprenticeship: £2.68 per hour Apprentices aged 19 or over who have completed one year of their apprenticeship are entitled to receive the NMW applicable to their age (as above). Many types of payments made to a worker (not just basic pay) count towards satisfaction of an employer's NMW obligations. However, some payments are specifically excluded, such as expenses. Calculating whether an employee has been paid the NMW can be complicated. In essence, it is a case of dividing the number of hours worked by an employee during the relevant pay reference period by the amount of pay they received. However, there are different rules for calculation depending on what type of work is being undertaking. HMRC enforces payment of the national minimum wage. Employers are obliged to keep records to demonstrate that they have complied with their NMW obligations and HMRC compliance officers can ask to check these. Employers found to have breached the NMW requirements must pay any unpaid wages. In addition, they are subjected to a financial penalty calculated on the basis of up to 50% of the total underpayment, subject to a maximum of £5,000. The government has recently announced its intention to increase these financial penalties from 50 to 100% of unpaid wages and increase the maximum penalty to £20,000. Employers can find further information on their NMW obligations on the HMRC website (www.hmrc.gov.uk).