National Minimum Wage
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There are five rates of National Minimum Wage (as of 1 April 2017):
- for workers 25 and over – The National Living Wage – is £7.50 per hour
- for workers aged 21-24 - £7.05 per hour
- for workers aged between 18-20 - £5.60 per hour
- for workers under 18 it is £4.05 per hour
- the rate for apprentices is £3.50 per hour.
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 200% of the total underpayment, with a maximum of £20,000 per worker.
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 five rates of National Minimum Wage. Rates as of 1 April 2017 are:
- £7.50 per hour for employees aged 25 and over (National Living Wage)
- £7.05 per hour for employees aged 21 -24
- £5.60 per hour for employees aged 18-20
- £4.05 per hour for employees aged under 18
- £3.50 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. Benefits in kind do not count towards minimum wage pay, even if they have a monetary value. However, there are special rules where you provide a worker with 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 £6.40 a day for each day that accommodation is provided. For more details see the National Minimum Wage and Accommodation page on the Gov.uk website.
Does the National Minimum Wage apply to rest breaks, sick time and holidays?
There are four main types of work and each can apply in the accommodation sector:
- 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 basic ascertainable hours each year in return for an annual salary paid in instalments.
- output: paid by the piece - the number of things they make, or tasks they complete
- unmeasured: paid in other ways
The different types of work give rise to varied ways of determining entitlements. For more information go to the Minimum Wage and Different Types of Work page on the Gov.uk website.
Regardless of the contract type, the determination of work hours does not include rest breaks, sick time, or holidays.