National minimum wage ― overview

By Tolley
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The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • National minimum wage ― overview
  • Eligibility
  • Minimum hourly rates
  • Apprentices
  • The accommodation offset
  • Checking pay against the minimum
  • Claiming the shortfall in pay
  • Records for NMW purposes

Statute provides that almost all adult workers should be paid at a minimum hourly rate ― either the national living wage (NLW) or the national minimum wage (NMW) (according to the age of the worker and whether he is an apprentice). Unless otherwise stated, all references to the NMW in this guidance note should be read as including the NLW.

National Minimum Wage Act 1998; SI 2015/621

At Spring Budget 2020, the Government announced that it is committed to helping with the living cost for everyone across the UK and will announce a new target for the NLW to help reach two-thirds of median earnings. The NLW will be extended to workers aged 21 and over by 2024. Provided that economic conditions allow it, this means that NLW is expected to be over £10.50 in 2024. This adds to the 6.2% increase of the NLW to £8.72 an hour that takes effect from April 2020 (see Spring Budget 2020 , p 70 (web) para 2.5).

Eligibility

Most workers who work in the UK are entitled to be paid the minimum wage. This is a very broad category of people and includes all those who personally provide work or services under a contract, except for those who are self-employed and in specified excepted groups including:

Office holders (unless the terms of their contract specifically make them workers)NMWA 1998, s 54(3)

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