The National Minimum Wage (NMW) has now been with us since 1999 but still employers are being prosecuted in large numbers (1,746 in 2008/09) for failing to pay the correct amounts to their employees. The government has now decided to adopt a far tougher stance and from January 1 2011 those employers found guilty will be named and shamed on the Department for Business Innovation and Skills (BIS) website. Furthermore those guilty employers will be named in regular BIS press releases and other media sources who choose to report this.
Getting it Right
The NMW is the minimum amount per hour that an employer is legally required to pay its employees. The rates are normally changed each year on 1 October. An employee is entitled to this hourly rate even if he/she has signed a contract which stats a lower rate. Since 1 October 2010 the age at which an employee is entitled to the main rate was reduced from 22 to 21. The apprentice rate was introduced on the same date.
Current NMW rates
There are different levels of NMW, depending on age and whether the employee is an apprentice. The current rates (from 1 October 2012) are:
- £6.19 - the main rate for workers aged 21 and over
- £4.98 - the 18-20 rate
- £3.68 - the 16-17 rate for workers above school leaving age but under 18
- £2.65 - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship
If the employee is of compulsory school age they are not entitled to the NMW. Some of their other employment rights are also different.
The rates from 1 October 2013 will be:
- £6.31 - the main rate for workers aged 21 and over
- £5.03 - the 18-20 rate
- £3.72 - the 16-17 rate for workers above school leaving age but under 18
- £2.68 - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship
If you employ workers below 21 make sure you diarise their birthdays and forewarn your wages department well in advance of that date. Furthermore a letter should be sent to your employee to confirm the rate change.
The new rates of NMW are usually announced well in advance of the 1 October. Therefore contact the Low Pay Commission website http://www.lowpay.gov.uk/ or the government website http://www.direct.gov.uk well in advance of this date.
If you spot any NMW errors, notify your employee immediately and reimburse them, plus interest. An apology would also be a sensible move, along with a suitable non monetary gesture (perhaps a bottle of wine or an equivalent) to improve employee relations.
This article was written by Jeremy Edwards, Chairman of the Chamber of Commerce
and first published in The Falmouth Packet