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The National Minimum Wage Regulations became law on the 1st April 1999 to enforce a statutuory minimum wage making it illegal for employers to pay less.
The Regulations apply to employers in the UK, regardless of the size of the business, subject to the exceptions listed below.
The Minimum Wage Rates
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1. |
Standard minimum wage of £5.35 per hour for workers aged 22 or over.
This will increase to £5.52 from 1st October 2007.
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2. |
Minimum wage level of £4.45 per hour for workers aged 18-21 inclusive.
This is known as the "development rate".
This will increase to £4.60 from 1st October 2007.
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3. |
Rate for 16 and 17 year olds
Minimum wage level of £3.30 per hour for workers aged 16-17.
This will increase to £3.40 from 1st October 2007.
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4. |
Fair Piece Rates
From 1st October 2004 employers have had to pay employees on piece rate work the same as the national minimum wage. From April 2005 this rate was increased to 120% of the national minimum wage. (This means that most piece workers will instead be paid the national minimum wage hourly wage.)
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Workers Covered by the Regulations
The following workers are covered by:
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Full-time workers.
Part-time workers.
Casual workers.
Home workers.
Freelance workers.
Temporary & agency workers.
Those of retirement age or pensioners, if they are working.
Piece workers, who must be paid the minimum wage for every hour worked.
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(Detailed information regarding Piece workers is provided in the National Minimum Wage Regulations).
Workers Not Covered
The Regulations do however allow for exceptions, the following workers are not covered:
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Some Apprentices.
Members of the armed forces.
Share fishermen.
Volunteer workers.
Prisoners employed during their sentence.
The self-employed.
Au pairs and nannies.
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Employers will not be able to avoid paying less than the minimum wage by making current employees become self-employed. There are strict tests under employment law regarding who is judged self-employed and who counted as an employee.
Enforcement of the Regulations
The Regulations are enforced by the Inland Revenue and the Contributions Agency.
An employer can be served with an Enforcement Notice by the Inland Revenue or the Contributions Agency instructing him to comply with the law within a set time period. If the employer fails to comply they will be made to pay a civil fine of
twice the amount of the national minimum wage per day for every worker paid below the minimum wage.
There is also a maximum criminal fine of £5,000 for the following situations:
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Refusing to comply with the Regulations.
Failing to keep proper wage records or keeping false records.
Obstructing an official from either the Inland Revenue or the Contributions Agency.
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