Minimum Wage rises - how to comply with the changes

The government introduced a raft of regulation changes this month – including an increase in the National Minimum Wage.

The National Minimum Wage (NMW) was boosted following its regular review.

As a business owner it is important that you understand these changes, and that you comply with them.

What has changed?

The National Minimum Wage has risen, following recommendations made by the Low Pay Commission.

All four rates have increased. The changes are effective from 1 October. The new rates are as follows:

  • Adults: £6.08 an hour (an increase of 15 pence)
  • 18-20 year olds: £4.98 an hour (an increase of 6 pence)
  • 16-17 year olds: £3.68 an hour (an increase of 4 pence)
  • Apprentices: £2.60 an hour (an increase of 10 pence)

Who does the Minimum Wage apply to?

The vast majority of workers are entitled to be paid at least the National Minimum Wage. It is not legally possible to opt out of this. Even if an employee signs a contract stating that they agree to be paid less than the NMW, you will still be legally obliged to pay them at least the relevant rate.

Broadly, an individual is entitled to be paid at least the Minimum Wage if they have a contract of employment, or a contract to personally provide services. That contract might be oral or written. This includes apprentices, trainees, and agency workers.

What about tipping?

In the past, some businesses had attempted to circumvent the National Minimum Wage legislation by topping up the minimum wage with tips. They would pay a basic rate below the NMW, and expect that the difference would be made up through tipping.

It is important to understand that this is illegal. Eligible workers must receive at least the National Minimum Wage from their employer, regardless of tipping.

What about interns?

There remains widespread confusion about the legal status of interns. Unpaid internships are very common, with thousands of people across the country turning up to businesses every day and not being paid.

It is vital to note that the majority of interns are legally entitled to be paid the National Minimum Wage. Failure to pay them at this rate will leave your business open to tribunal proceedings – and could well see you required to pay unpaid wages. Successful cases of this sort have been brought recently.

As a basic guide, an intern will almost certainly be entitled to the NMW if they have set hours, or a set schedule of work. Read more about internships and the law.

Read more about the other recent regulation changes