Generally, everyone who “provides a personal service” is entitled to be paid at least the National Minimum Wage. This includes employees, workers (including agency workers), and certain people who might regard themselves as self-employed.
The rates from 1 October 2016 are:
The rate will then change every April starting April 2017.
The rates from 1 October 2015 were:
Workers under the compulsory school age are not entitled to receive the National Minimum Wage.
There are however some exceptions to this, and also some special situations. The main exceptions are covered below.
Non-executive directors are not entitled to receive the National Minimum Wage unless they also happen to be an employee/worker of the business.
A “family worker” is excluded from the National Minimum Wage. This is someone who is treated as being part of the family and who is employed to perform household tasks. This is intended to cover au pairs but each case will turn on its own facts and specialist advice should be sought in all cases.
A student who is undertaking a work experience placement of less than one year as part of a higher education or further education course is not entitled to receive the National Minimum Wage. However, if the placement is not part of the course the student is likely to qualify for National Minimum Wage.
A person undertaking work experience will not normally qualify for the National Minimum Wage unless they can show they are a “worker”. As with interims, this can depend upon what the person does, what is promised, and what benefits they receive. Specialist advice should be sought in all cases, particularly for business who are seeking to reduce risk.
Whether an intern qualifies for the National Minimum Wage is not always clear because this depends upon whether the intern is a “worker”. This can in turn depend upon what the employer promises, what the intern does during their time with the business, and in cases where the intern is already working, the nature of any payments they have received so far. Again, specialist advice should be sought in all cases – particularly for businesses wishing to take on interns – to minimise risk.
Voluntary workers – someone volunteering for a charity, voluntary organisation, associated fund-raising body or a statutory body – are not normally entitled to receive National Minimum Wage, provided the arrangement or agreement with the worker provides for nothing above and beyond expenses, reasonable subsistence or accommodation.
Volunteers are normally exempt from the National Minimum Wage, but if the volunteer can show that the arrangement between them and the organisation is such as to make them a “worker” then they may qualify. This can be the case where the arrangement places obligations – rather than simple expectations – upon each party. Each case depends upon its own facts and specialist advice should be sought.
Where accommodation is provided as part of a worker’s remuneration package, an employer is entitled to off-set a maximum of £4.91 against the worker’s daily earnings.
So, a worker will receive a lower hourly rate than the National Minimum Wage but the accommodation that the employer provides will be treated as making up the shortfall. Employers seeking to provide accommodation – whilst paying workers less – should seek specialist advice.
It is possible that workers who receive a low salary – whilst having to work a large number of hours in the same pay period – will be paid less than the National Minimum Wage on an hourly basis.
For example, if a worker is paid £14,000 and works 43 hours per week then they will have received the National Minimum Wage based on the current rates. However, if they are paid monthly and there is one month where they work 45 hours or more per week, then their hourly rate of pay will fall below the National Minimum Wage and they would be underpaid for that month.
Traditionally agricultural workers are entitled to receive a higher rate of pay than the National Minimum Wage – but this is changing from 1 October 2013 and the government is seeking to phase it out. The pay an agricultural worker will be entitled to receive will depend upon exactly what type and level of work they do, and it will also depend upon when they commenced employment. Specialist advice should be sought in such cases.
The entitlement of apprentices is more complicated since it depends upon the type of apprenticeship and the age of the apprentice.
A person who works under a contract of apprenticeship or a government apprenticeship (which includes “Apprenticeships” and “Advanced Apprenticeships”) is entitled to a lower rate for their first year regardless of their age – £2.68 from 1 October 2013. In the second year of their apprenticeship they are also only entitled to the apprenticeship rate, unless they are over 19 in which case they become eligible for the usual rate of National Minimum Wage that applies to their age range.
Due to a loophole in the law, a person under a new “apprenticeship agreement” is entitled to National Minimum Wage rather than the lower apprenticeship rate – but this is likely to change.
Casual workers – or persons employed under “zero hour contracts” – are entitled to receive the National Minimum Wage for the time when they work, and on an hourly basis. Unless their contract provides otherwise, generally, they are not entitled to payment for times when they do not work.
Complications can arise where a worker is “on call”. Generally, workers are entitled to be paid for all time when they are at or near work, and where they are required to be available to work – but this will often exclude time spent at home, and it always excludes time spent sleeping. Cases of this nature are often a “grey area” and specialist advice should be sought.
Time spent training – and also time spent travelling for work purposes (but excluding between home and work) – will normally attract the National Minimum Wage.
Some employers pay their workers based on their output, i.e. production. These cases are complicated and specialist advice should be sought.