The minimum wage rate is the minimum hourly rate you can pay an employee, regardless of the size of the company. The minimum wage is regularly changed and adjustments need to be made to take these changes into account. As and when the hourly rate changes, you should ensure that you are paying the correct rate for all employees.
The current minimum wage rates for UK workers from October 2015 are as follows:
- Adult rate (over 21) is £6.70 per hour
- 18 – 20 year olds is £5.30 per hour
- 16 – 17 year olds is £3.87 per hour
- Rate for apprentices is £3.30 per hour
The minimum wage is not purely for those who are paid on an hourly basis, it benefits those who are also on an annual salary or paid by piece of work. You can check what you should be paying by using the official minimum wage calculator.
There are no restrictions with regards to the hours employees are working and their eligibility for the national minimum wage. They may work part time, full time or even from home. As long as they are working through the employer on employment terms that are eligible for the minimum wage, then the location and hours of work are largely irrelevant as long as they meet minimum thresholds.
Terms of the National Minimum Wage
There are various points to remember about the national minimum wage.
- It is reviewed on an annual basis by the Low Pay Commission. The changes are made and announced in October. There has been an increase in rates over the last few years.
- HMRC are able to take employers to court if they are not paying the minimum wage, which shows the importance of ensuring it is right.
- Workers have the right to check if they have been paid at the minimum wage by previous employers. If not, they may be entitled to be reimbursed.
Categories who are not entitled to National Minimum Wage
The following are the main categories of workers which are not entitled to the national minimum wage.
- Working on a self-employed basis
- Voluntary worker
- Company Directors
Changes in 2016
The hourly rate is due to increase again from the 1st October 2016, but this will only affect employees that are 25 years and over. It is a good idea to start to consider this change and take steps to put it into place if it relates to a portion of your workforce, as this will help ensure you are one step ahead before these come into practice.
If you are providing employees with accommodation as part of their payment, this can be offset against the value of the national minimum wage. The accommodation offset rate for accommodation charges is £5.08 a day or £35.56 a week. It is important to ensure this is accurate and that you are paying employees at the right rate.
If your business operates in the agricultural industry, there are different laws regarding payment. There is an agricultural minimum wage, which is different to the national minimum wage. This means that some workers will be paid more than the national minimum wage, although they can’t be paid less.