The National Minimum Wage Act 1998 was introduced to create a statutory minimum hourly wage rate for employees and workers. The National Minimum Wage (NMW) framework includes different pay levels depending upon a person’s age.
When first introduced back in April 1999, the pay bands within the NMW were broken down for those of the age of 22 years and above, youth development group which included those aged between 18 and 21 years, and an age rate of 16-17 years of age.
Since then, we have seen further age categories added and the boundaries of the categories also change.
The NMW is different to the National Living Wage (NLW). The NLW which was introduced later in 2016 and again, as part of an amendment to the National Minimum Wage Act of 1998, introduced a new age category. It required a certain pay rate to be given to all those who were 25 years and above. Consequently, other age groups as set out within the legislation also changed.
Over time, we have seen may changes to the minimum statutory pay rates and currently, we have the following minimum payments in place:
National Living Wage
23 years and above
National Minimum Wage
Everyone aged 21 – 22 years
Development Rate
Everyone aged 18-20 years
Rate for young workers
Everyone aged 16–17-year-olds, excluding those of compulsory school age
Apprentice Rate
Apprentices under the age of 19 years old or is aged 19 or above and in their first 12 months of an apprenticeship
Most employees and workers are eligible for the minimum wages, so this includes agency workers, and those on zero hours or casual agreements. They must work in the UK under a contract and no longer be of compulsory school age.
There are exclusions within the National Minimum Wage Act 1998, so not all individuals will be entitled to the NMW or NLW. Some of these exclusions include:
To calculate whether a worker or employee is receiving the minimum wage requires calculating an hourly rate of pay. This involves looking at the payments received within a reference period and dividing the payments received by the number of hours worked.
The statutory right is to be paid at or above the minimum wage on average for time worked over a pay reference period, not to be paid for each actual hour worked.
The reference period that is used would be based on the intervals in which the employer pays the employee, such as weekly, monthly or any other period up to a maximum of a month.
A worker/employee can submit an employment claim or a claim through the civil court where they have not been receiving the minimum wage.
There is legal protection from being dismissed or receiving unfair treatment because of their legal right to a minimum level of pay rate. Furthermore, the Equality Act 2010 provides protection for people not to be discriminated against based on age, so any failure to pay this rate of pay could also be discriminatory.
In addition to the NMW and NLW, there is also the real Living Wage. It was created by the Living Wage Foundation, a foundation that recognises that wages should reflect everyday needs. It differs from the NMW and NLW because it is a voluntary scheme that an employer can subscribe to, whereas the NMW and NLW is the legal minimum in which all employers must pay.
Victoria Templeton is the HR Knowledge Manager at HR Solutions, an outsourced HR services firm offering employment law, and health and safety support and advice to businesses across the UK.
Image: Getty Images
Publication date: 18 July 2022
Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.
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