Increase to National Minimum Wage – 1 October 2015

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The National Minimum Wage (NMW) is the minimum hourly rate of pay that the majority of workers should be paid.

A worker is someone who:

  • Works under a contract of employment, or
  • Works under a contract to personally provide services or personally undertake/perform work for another so long as the other is not a customer or client.

This typically includes agency workers, agricultural workers, apprentices, some directors, homeworkers, family workers, overseas workers and mariners. Young workers, i.e. those under compulsory school leaving age, are not entitled to receive NMW.

There are no exemptions according to the size of business or by sector, job or region.

The current rates of NMW:

  • £6.50 for workers 21 and over
  • £5.13 for 18-20 years
  • £3.79 for 16-17 years, who are above school leaving age but under 18
  • £2.73 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

As of 1 October 2015, new NMW rates will apply as follows:

  • £6.70 for workers 21 and over
  • £5.30 for 18-20 years
  • £3.87 for 16-17 years, who are above school leaving age but under 18
  • £3.30 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

It is important to note that these rates apply to pay reference periods beginning on or after 1 October 2015.

Enforcement: 
The NMW is enforced by HMRC. An investigation may be instigated by a complaint made by a worker or by HMRC targeting a sector renowned for low pay.

Inspections by HMRC Officers can be undertaken without notice and no reason has to be given. Employers must co-operate with the investigation by providing access to records and copies of information as necessary to determine the levels of pay received by workers.

A failure to pay NMW could result in civil and/or criminal proceedings being bought against the Employer. In some instances the employer may be ‘named and shamed’ via publication by the Department for Business, Innovation and Skills (BIS).

The employer is also likely to face a fine set at 100% of the total underpayment of the NMW. The minimum penalty is £100 and the maximum penalty is £20,000.

Contact our Employment team for further information.

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