Entitlement to National Minimum Wage

Employers must ensure they are paying staff the new National Minimum Wage (NMW) and National Living Wage (NLW) rates for the period from 1 April 2022 – 31 March 2023. The NLW is the minimum hourly rate that must be paid to those aged 23 or over. The rate for the NLW is £9.50. The hourly rate of the NMW (for 21-22-year-olds) is £9.18. The rates for 18-20-year-olds is £6.83 and the rate for workers above the school leaving age but under 18 is £4.81. The NMW rate for apprentices is £4.81.

HMRC’s manuals discusses the legal entitlement for employees to be paid the NMW. Most workers in the United Kingdom who are over compulsory school leaving age (and those who ordinarily work in the United Kingdom) are entitled to be paid at least National Minimum Wage rates.

This entitlement to the NMW is set out in the National Minimum Wage Act 1998, section 1 as follows:

(1) A person who qualifies for the National Minimum Wage shall be remunerated by his employer in respect of his work in any pay reference period at a rate which is not less than the National Minimum Wage.
(2) A person qualifies for the National Minimum Wage if he is an individual who-

1. is a worker.
2. is working, or ordinarily works, in the United Kingdom under his contract, and
3. has ceased to be of compulsory school age.

It is important that employers ensure they pay employees at least the minimum wage to which they are entitled. There are penalties for non-payment of minimum wages of up to 200% of the amount owed. The penalty is reduced by 50% if all of the unpaid wages and 50% of the penalty are paid in full within 14 days.

The maximum fine for non-payment can be up to £20,000 per employee. Employers who fail to pay, face up to a 15-year ban from being a company director as well as being publicly named and shamed.