The UK National Minimum Wage - A Brief Employer's Guide

Since the 1st of April 1999 all workers in the United Kingdom have been subject to the National Minimum Wage Act; this act of parliament set a national minimum amount that employers in the UK must pay their employees; it is also the minimum amount that workers in the UK are allowed to tender their services for. Workers can, of course, earn more than the UK minimum, but never less.

The introduction of the National Minimum Wage Act was intended to protect UK workers from exploitation, and almost all UK workers are now entitled to the UK minimum. All adult workers over the age of 22 must currently be paid, (as of October 2009), a minimum of £5.80 per hour, for 18-21 year olds this drops to a minimum of £4.83 per hour and for those teenagers under 18, who have left school and are working, there is a UK minimum wage of just £3.57 per hour.

Although almost everyone is entitled to a minimum wage in the UK, there are some workers who are not, these include: self-employed people, company directors, volunteers, voluntary workers, apprentices under 19 years of age, members of the armed forces, share fishermen and prisoners. Workers enrolled on certain government schemes or doing work experience also fall outside of the act.

If you are an employer the hours that you must pay your employees for are also covered by the act, but vary depending on the type of work your employees are doing; for NMW purposes there are actually four 'types' of worker:

'Salaried-hours' workers have a contract that states the minimum amount of hours they will be paid for each year and are paid an equal installment of this salary usually on a monthly basis.

'Output Workers' do not have fixed working hours and are paid a commission for each task performed or product produced; this is sometimes referred to as 'piece work'.

'Time Workers' is the term that encompasses both part-time and full time workers and describes employees who are paid according to the time they have worked.

Finally 'unmeasured workers' are paid either a set amount for working a certain length of time i.e. per week or for a set task.

Paying the correct taxation is not the only reason that you will need to have a very good record keeping system in place if you are an employer, keeping sufficient records to satisfy HMRC as regards your payment of the minimum wage is something you have to do by law and so enlisting your accountant to provide training and guidance on the sort of records you need to keep is no bad idea; also remember that the records must be stored for an absolute minimum of three years and should include all workers' dates of birth, to enable HMRC to check the minimum wage rate that the employee should have received, copies of every contract and any update or amendment made, a record of employee absences, shift patterns, overtime worked and details of every payment to every worker.

It you have staff and you are at all concerned about how the National Minimum Wage effects what you pay, speak to your local HMRC office and take advice from your accountant, you can never be too well equipped when it comes to good information.

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