National Minimum Wage – New Rates from 1st October 2010

The National Minimum Wage (extracted from HMRC website)

The National Minimum Wage sets minimum hourly rates that employers must pay their workers. It covers almost all workers in the UK and is divided into three rates that apply to workers of different ages.

Important Updates and Changes

The adult minimum wage rate has been extended to workers aged 21 or over from October 2010. Previously the qualifying age for the adult national minimum wage was 22.

Apprentice Rate

These rates apply from 1 October 2010 to all apprentices as follows:
for apprentices aged under 19: £2.50 per hour
for apprentices aged 19 and over, but in the first year of their apprenticeship: £2.50 per hour

National Minimum Wage Rates

There are currently three different national minimum wage rates and an apprentice rate, which are usually updated in October each year. The rates that apply from 1 October 2010 are as follows:
for workers aged 21 years or more: £5.93 per hour
for workers aged 18 to 20 inclusive: £4.92 per hour
for workers aged under 18 (but above compulsory school age): £3.64 per hour
for apprentices aged under 19: £2.50 per hour
for apprentices aged 19 and over, but in the first year of their apprenticeship: £2.50 per hour.

Who’s entitled to the national minimum wage?

Almost all workers who work in the UK are entitled to the national minimum wage. But there are some groups who aren’t entitled, including:
self-employed people
children who are still of compulsory school age
For a full list of all the exceptions, follow the link at the end of this section.
It makes no difference to a worker’s entitlement to the national minimum wage whether they work for you full time or part time, or whether they are an agency worker, a temporary or casual worker, a piece worker or a home worker.
Apprentices aged 19 or over who have completed at least one year of their apprenticeship are entitled to receive the full national minimum wage rate applicable to their age.

Which payments count towards the national minimum wage?

National minimum wage pay is calculated in a certain way. Many of the payments that you make to a worker will count towards their national minimum wage pay, but some won’t. For example, a worker’s basic pay (before deductions of tax and National Insurance) counts towards national minimum wage pay, but any payments for expenses do not count.

How many hours has your worker worked?

Every worker who’s entitled to the national minimum wage must be paid at least their national minimum wage rate on average for every hour worked in each pay reference period. (The pay reference period is the interval at which you pay them – such as weekly or monthly, but it cannot be longer than a calendar month.)
This means that to work out how much you’re required to pay a worker, you need to calculate how many hours they have worked. For national minimum wage purposes, there are four different types of work, and there are different rules for calculating the number of hours worked for each of these.

The four types of work are:
time work
salaried hours work
output work
unmeasured work

Enforcement and Penalties

HMRC enforces the national minimum wage. From 6 April 2009, if HMRC finds you have underpaid the national minimum wage it will issue a notice of underpayment. This will show the arrears you must pay to your workers and the penalty you must pay to HMRC.
The penalty is 50 per cent of the total underpayment that has occurred from 6 April 2009. This figure will be shown separately on the notice of underpayment. There is a minimum penalty of £100 and a maximum of £5,000. If you pay the arrears and the penalty within 14 days of the date on which the notice of underpayment is served, you only need to pay half of the penalty.

If you receive a notice of underpayment you have a right of appeal. You can appeal against:

HMRC’s decision to issue a notice of underpayment
any requirement imposed by the notice of underpayment

Details of how and where to appeal will be included with the notice of underpayment.

Tags: Apprentice Rates, HMRC, National Minimum Wage, Wage Rates

This entry was posted on Sunday, October 10th, 2010 at 2:34 pm and is filed under Human Resources, National Minimum Wage, Payroll. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.