For pay reference periods starting on or after 1 April 2018, the hourly rates for national minimum wage (NMW) and national living wage (NLW) are:
- NLW for workers aged 25 and over: £7.83 (4.4% increase from £7.50).
- NMW for workers aged 21 and over: £7.38 (4.68% increase from £7.05).
- NMW youth development rate for workers aged 18 and not yet 21: £5.90 (5.36% increase from £5.60).
- NMW young workers rate for 16 and 17 year olds who are above school leaving age and are not apprentices: £4.20 (3.7% increase from £4.05).
- NMW for apprentices aged under 19, or 19 or over and in the first year of their apprenticeship: £3.70 (5.7% increase from £3.50).
The national living wage is a tier of the national minimum wage for workers aged 25+, so in this email, "minimum wage" is used to refer to both national minimum wage and national living wage.
National living wage should not be confused with the "real" living wage promoted by the Living Wage Foundation [see The "real" living wage, below], which is not compulsory.
From 1 April the accommodation offset rate is £7 per day / £49 per week, a 9.38% increase from £6.40 per day / £44.80 per week. Unlike all other company benefits in kind, such as food, car and childcare vouchers, accommodation provided by an employer, up to accommodation offset rate, can be taken into account when calculating minimum wage.
Minimum wage is enforced by HM Revenue and Customs. Most breaches come to the attention of HMRC through a worker or workers making a complaint through the pay and work rights helpline, but HMRC can also become aware of them through routine checks of employers' records. Employers issued with a minimum wage arrears notice from HMRC must immediately pay the arrears to affected employees, plus a financial penalty of double the underpayment for each worker found to be underpaid, to a maximum of £20,000 per worker. The penalty is reduced by half if the underpayment is paid to the employee within 14 days. In serious cases, company directors can be disqualified from being a company director for up to 15 years. (And under the Charities Act 2011 s.178, a person disqualified from being a company director is also disqualified from serving as a charity trustee, even if the charity is not a company.)
The Department for Business, Energy and Industrial Strategy regularly publishes lists "naming and shaming" employers who have not paid minimum wage. These nearly always include charities and other voluntary organisations. On the most recent list, published on 9 March 2018, the employer with the fourth-highest level of arrears was the Epilepsy Society, with 26 workers underpaid a total of £55,348. These 26 workers were provided with on-site accommodation, for which the charity deducted rent from their pay – but the deduction was more than the allowed accommodation offset and brought their pay to below minimum wage level. Other charities among the 179 employers on the most recent list were Threshold Housing Project Ltd, Tameside (total £26,034 underpaid to 41 workers), North London Asian Care, Enfield (total £15,687 underpaid to 70 workers), and Extra Care for Elderly People, Northern Ireland (total £1776 underpaid to six workers).
- Basic information on minimum wage, who is and is not entitled to it, what employers must do, and disputes: https://www.gov.uk/national-minimum-wage and http://www.acas.org.uk/index.aspx?articleid=1902.
- Current and past minimum wage rates: https://www.gov.uk/national-minimum-wage-rates.
- Detailed guidance on calculating minimum wage, including the rules on accommodation offset and on the distinction between volunteers and voluntary workers and when they are or are not entitled to minimum wage: https://www.gov.uk/government/publications/calculating-the-minimum-wage.
- Minimum wage calculator for employers: https://www.gov.uk/minimum-wage-calculator-employers and for employees: https://www.gov.uk/am-i-getting-minimum-wage.
- Pay and work rights helpline and complaints: https://www.gov.uk/pay-and-work-rights, tel 0300 123 1100.
The "real" living wage
The real living wage, which is voluntary and is based on the cost of living, is completely different from the statutory national living wage, which is a tier of the national minimum wage, is compulsory and is not based on the cost of living. The campaign for a real living wage is promoted by the Living Wage Foundation and seeks a voluntary commitment from employers to pay at least a real living wage as set independently each year. The living wage is announced annually in November, and employers who are committed to paying it are encouraged to implement the new rate as soon as possible and within six months of the annual announcement. An employer can become an accredited living wage employer by entering into an agreement with the Living Wage Foundation, agreeing to pay all directly employed staff the living wage, and putting a timetable in place for all contracted staff to move to the living wage.
The London living wage, set by the Greater London Authority and covering all boroughs in Greater London, for 2018 is £10.20 per hour, a 4.6% increase from £9.75 in 2017. The UK living wage for outside of London, set by the Centre for Research in Social Policy at Loughborough University, is £8.75, a 3.55% increase on £8.45. Living wage employers should implement this by 1 May 2018.
Information about the living wage, how it is calculated, accredited employers (including many voluntary organisations) and how to become a living wage employer is at https://www.livingwage.org.uk/.
Minimum wage and uniforms or tools
At least three of the employers on the 9 March 2018 minimum wage "name and shame" list – Wagamama, TGI Fridays and Karen Millen – ended up paying staff less than minimum wage because they required staff to purchase and wear specific clothing at work. Staff at TGI Fridays had to wear black shoes; those at Wagamama were given a branded t-shirt but had to wear their own black jeans or black skirt; Karen Millen staff had to wear clothes from its range, which they could purchase at a discount. When the workers' expenditure was set against the pay they received for the relevant pay period, they were in effect being paid less than minimum wage. Bristows solicitors has a very good short article about the issues and action for any organisation which requires staff to pay for clothing (or tools) where the cost could mean they are being paid less than minimum wage during that pay period . The article points out that students, casual workers and part-time workers, whose pay would be significantly reduced at the time they were required to purchase clothing.
"The cost of uniform and the minimum wage", 15 March 2018, Bristows solicitors: https://www.bristows.com/news-and-publications/articles/the-cost-of-uniform-and-the-minimum-wage/.
Minimum wage and travel time
This short paragraph was on my legal update website in February 2017, but I am reprinting it here because failure to pay minimum wage for travel time remains very common. It is not payable for time spent travelling between home and a person's normal place of work and back again, but for a time worker (paid by the hour) or salaried worker, minimum wage must be paid when the worker is:
- required to travel in connection with their work (any rest breaks taken during the time the worker is travelling, such as lunch on board a train, also count as time worked);
- waiting for a train or changing trains or other form of transport (but not rest breaks while waiting);
- travelling from one work assignment to another (but not rest breaks);
- waiting to collect goods, meet someone in connection with work, or start a job;
- travelling from work to training venues (but travel between home and the training venue does not count);
- time spent training for their work, either at the workplace or somewhere else (this also applies to workers required to undertake training before starting to work for the employer).
For more about minimum wage and travel time, see p 30 in HMRC's detailed guidance for calculating minimum wage at https://www.gov.uk/government/publications/calculating-the-minimum-wage.