Employee Pay and the National Minimum Wage

Unless work is conducted on a voluntary basis, workers will expect to be paid for providing their services.  As an employer, you are responsible for ensuring that workers’ rate of pay is at least equivalent to the National Minimum Wage, which is a prescribed rate of pay for workers who are over the compulsory school age (16 years of age). The rate will vary dependent on the worker’s age or job situation, for example apprentices have a separate rate.  

Minimum hourly wage rates from 1 April 2021 are as follows:

These rates increase annually.

Whether a worker has received the National Minimum Wage will depend on their average hourly rate. This is calculated on the basis of:

The total remuneration earned over the relevant pay reference period (for example a month or a week) divided by the total number of hours worked over the pay reference period.

When a worker is due to be paid, you should ensure that they are provided with a written pay statement setting out their gross pay and take home pay. The statement should detail any deductions that have been made, such as National Insurance or pension contributions. 

The National Minimum Wage Regulations set out what can and cannot be included in calculating whether a worker is receiving the National Minimum Wage. Depending on how a worker is paid, the calculations can be complicated. There are also specific rates for agricultural workers.

With the Government ‘naming and shaming’ companies who fail to pay the National Minimum Wage, getting it wrong can be extremely damaging to a business’ reputation as well as costly, as they may face claims for back pay. Companies can also be prosecuted by HMRC.