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Thursday, March 29th, 2018

Legal update: national minimum wage

The following update has been received from Sandy Adirondack, voluntary sector legal expert – www.sandy-a.co.uk

National minimum wage and national living wage rates from 1 April

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.)

Resources

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 travel time

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.

To join the legal updates email list, contact legalupdate@sandy-a.co.uk.