National Minimum Wage

The National Minimum Wage (NMW) was introduced on 1st April 1999. There have already been a number of instances of employers being penalised for not complying with the legislation. HMRC are the agency that ensures enforcement of the NMW.

Current NMW Rates

There are different levels of NMW, depending on your age and whether you are an apprentice. The current rates are:

£5.93 - the main rate for workers aged 21 and over

£4.92 – the 18-20 rate

£3.64 – the 16-17 rate for workers above school leaving age but under 18

£2.50 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

The age at which you become entitled to the main rate was reduced from 22 to 21 on 1st October 2010. The apprentice rate was introduced on the same date. If you are of compulsory school age you are not entitled to the NMW. Some of your other employment rights are also different.

Rates from 1 October 2011

The NMW rates are reviewed each year by the Low Pay Commission and from 1st October 2011:

The Employment Equality (Age) Regulations provide a specific lawful exemption enabling young workers to continue to be paid below the standard adult NMW and allowing the different rates to be used according to the above age bands.

This was in response to employers’ concerns about financial pressures if the maximum rate was applied to all employees. In addition, there is a fair piece rate which means that employers must pay their output workers the minimum wage for every hour they work based on an hourly rate derived from the time it takes a worker working at average speed to produce the work in question.

The entitlement of workers paid under this system is uprated by 20%. This means that the number reached after dividing the NMW by the average hourly output rate must be multiplied by 1.2 in order to calculate the fair piece rate. There are no exemptions from paying the NMW on the grounds of the size of the business.

next page>>