National Minimum Wage
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There are four rates of National Minimum Wage (as of 1 October 2016):
- the main adult rate (for employees aged 21 and over) is £6.95 per hour
- the National Living Wage premium, which is added to the National Minimum Wage for employees aged 25 and above, means that the minimum pay for these employees is £7.50 per hour from 1 April 2017
- the development rate for 18-20 year old employees is £5.55 per hour
- the development rate for employees under 18 is £4.00 per hour
- the rate for apprentices is £3.40 per hour.
Video: guidance from HMRC
Is this relevant to me?
The National Minimum Wage came into effect on 1 April 1999. It is relevant to all accommodation providers that have employees, regardless of the size of the business. The National Minimum Wage is enforceable by HM Revenue and Customs (HMRC).
If HMRC find that you have underpaid any of your staff, they can issue a Notice of Underpayment requiring the employer to repay arrears to their staff (paid at the current minimum wage rate) and pay a penalty to the Government. The penalty is 100% of the total underpayment, with a maximum of £20,000.
Who is entitled to the National Minimum Wage?
Anyone working for you (including part-time and casual staff) is entitled to receive the National Minimum Wage except:
- anyone 'genuinely self-employed' (e.g. someone who controls their own time, what work they do, and invoices you rather than receiving wages)
- voluntary workers;
- workers who are based permanently outside the UK or who are based in the Channel Islands or the Isle of Man.
What is the National Minimum Wage?
There are four rates of National Minimum Wage. Rates as of 1 October 2016 are:
- £6.95 per hour for employees aged 21 and over
- £5.55 per hour for employees aged 18-20
- £4.00 per hour for employees aged under 18
- £3.40 per hour for apprentices aged under 19 or those in the first year of their apprenticeship.
Further information on the National Minimum Wage, including current rates, can be found on the Gov.uk website.
What counts as part of a wage?
Included: In addition to basic pay, certain other payments may count towards the National Minimum Wage, including:
- money for items such as clothing and shoes where the worker can decide where to buy the items.
Excluded: Other additional payments are excluded, including:
- premium payments for overtime of shift work
- special allowances
- tips, service charges or any other type of gratuity (see Tips and service charges below)
- expenditure on items such as clothing and tools related to work
- all benefits in kind, including meals, except accommodation.
If you provide accommodation to a member of staff, you are entitled to offset an amount for this against the National Minimum Wage. If the accommodation is provided free of charge, the daily rate of the accommodation offset is £6.00 a day for each day that accommodation is provided.
Does the National Minimum Wage apply to rest breaks, sick time and holidays?
There are two main types of contract for workers in the accommodation sector – “time work” and “salaried hours work”.
- time work: when you pay the worker according to the number of hours he/she works
- salaried hours work: when the workers have a contract to work a set number of hours each year in return for an annual salary paid in instalments.
The two types of contract give rise to two ways of determining entitlements.
However, regardless of the contract type, the determination of work hours does not include rest breaks, sick time, or holidays.