National Minimum Wage
The National Minimum Wage (NMW) is the minimum rate of hourly pay most workers are entitled to by law. The minimum rate depends on a worker’s age and is a fixed rate if they are an apprentice.
The National Living Wage
The Government’s National Living (NLW) Wage was introduced on 1 April 2016 for all working people aged 25 and over.
Increases in the minimum wage have clearly led to higher wages and improved earnings. Higher minimum wages meant that businesses have incurred additional costs, but it is not clear as yet how this has affected businesses. There is concern over the ability of small employers being able to manage NLW increases, particularly if they continue to rise way beyond the rate of inflation. The diagram below shows how micro businesses have seen faster growth in employment and hours compared to the economy.
● Most workers over school leaving age will be entitled to receive the NMW.
● HM Revenue & Customs (HRMC) can take employers to court for not paying the NMW/NLW.
Rates of pay – from 1 April 2019 are:
|From 1 April 2019||From 1 April 2018||Increase|
|25 yrs old and over (NLW)||£8.21 per hour||£7.83 per hour||4.9%|
|21-24 yrs old||£7.70 per hour||£7.38 per hour||4.3%|
|18-20 yrs old||£6.15 per hour||£5.90 per hour||4.2%|
|Under 18||£4.35 per hour||£4.20 per hour||3.6%|
|Apprentices under 19 or 19 or over who are in the first year of apprenticeship||£3.90 per hour||£3.70 per hour||5.4%|
Apprentices are entitled to the apprentice rate if they’re either:
- aged under 19
- aged 19 or over and in the first year of their apprenticeship
Example: An apprentice aged 22 in the first year of their apprenticeship is entitled to a minimum hourly rate of £3.90.
Apprentices are entitled to the minimum wage for their age if they both:
- are aged 19 or over
- have completed the first year of their apprenticeship
Example: An apprentice aged 22 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £7.70.
Penalties for failure to comply with the National Living Wage
HM Revenue & Customs (HRMC) can take employers to court for not paying the NMW/NLW. With the introduction of the National Living Wage the penalty for non-payment will be 200% of the amount owed. The penalty is reduced by 50% if the unpaid wages and the penalty are paid within 14 days.
The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.