National minimum wage - questions answered
The national minimum wage (NMW) has been in place now for a decade amd yet there are still cases of employers ending up at Tribunal for failing to pay.
However, David Wright, who gives legal advice to habia and a variety of salons says thare hasbeen a trickle of key Employment Tribunal cases further emphasising that minimum means minimum.
Here David answers some of your questions about the minimum wage:
What is the NMW and when does it change?
The minimum wage is reviewed each year and changes on 1 October.
The current hourly rate is:
- Adult rate - £5.80
- 18 to 21 years - £4.83
- 16 to 17 years - £3.57
I am planning my wage costs for 2010 - are there likely to be any changes in the NMW?
Since 1999, the rate of the minimum wage has risen faster than inflation. There is a suggestion that the adult minimum wage will be payable at 21, rather than 22, from October 2010.
Are apprentices exempt from the NMW?
Yes, but partially.
- The minimum wage is payable to apprentices at the age of 19. If you recruit an apprentice who is already 19 they are exempt from the minimum wage for the first 12 months.
- While apprentices are not entitled to the minimum wage there is a minimum apprentice rate of £95 per week.
Once again there are rumours that there will be changes involving apprentices this year. I was contacted only last month by an apprentice aged 34 who had been paid the apprentice wage throughout the two years of her training.
One of my apprentices has just qualified, but is still very inexperienced. She has agreed to receive £1 an hour under the NMW if I keep her on. As it is her suggestion, is this okay?
No, legally it isn't. She is entitled to the minimum wage and cannot legally agree to receive less. At any time she could make a successful claim for the arrears and you would be liable and could be fined up to £5,000 if the practice was discovered.
I pay my staff £4 an hour plus commission, they always receive well over the NMW and if they didn't I would pay the amount. Is this compliant?
The position was clear that as long as staff reached the minimum wage the law had been complied with. However, in November 2009 a nursing home lost a case where the hourly rate was paid less than the minimum wage but the staff received 30% supplement for shift work. This meant the hourly rate was over the minimum wage. However, the employer lost the case as the minimum wage applies to the hourly rate and the supplement was for something different. The position of commission could be viewed similarly, as that is paid on client takings or retail sales.
I understand checks are carried out to find out if employers pay the NMW, but are there ever prosecutions?
The HM Revenue and Customs reported that more than £4.5m had been recovered on behalf of 23,000 workers. The fine for employers is a maximum of £5,000. The most recent case I became aware of involved a butcher. He pleaded guilty to not paying the minimum wage and making false records. He was fined £700 and had to pay £9,000 in arrears to two staff.
In another case a hairdresser resigned from her post as she wasn't receiving the minimum wage. She took her case to Employment Tribunal claiming constructive dismissal and won her claim and pay arrears.
What deductions can I make from my staff who are on the NMW?
All of the following are permitted:
- Paying back advances of wages
- Paying back overpayments
- Any agreed deductions, such as pension contributions
- Payments which are voluntary such as products or hair treatments in the salon.