There is a temptation to consider that the National Minimum Wage (NMW) and National Living Wage (NLW) rates are a guide to the amounts you should be paying employees. In fact, they are the minimum rates you should use (unless you are covered by the exceptions listed below) and they are a legal requirement, one that has teeth.
We have reproduced below workers entitled to these rates, and those not entitled.
Workers entitled include:
casual labourers, for example someone hired for one day
workers and homeworkers paid by the number of items they make
trainees, workers on probation
apprentices are entitled to special rates if under 19 or in the first year of their apprenticeship.
Those not entitled include:
self-employed people running their own business
volunteers or voluntary workers
workers on a government employment programme, such as the Work Programme
members of the armed forces
family members of the employer living in the employer’s home
non-family members living in the employer’s home who share in the work and leisure activities, are treated as one of the family and aren’t charged for meals or accommodation, for example au pairs
workers younger than school leaving age (usually 16)
higher and further education students on a work placement up to 1 year
workers on government pre-apprenticeships schemes
people on the following European Union programmes: Leonardo da Vinci, Youth in Action, Erasmus, Comenius
people working on a Jobcentre Plus Work trial for 6 weeks
people living and working in a religious community
a student doing work experience as part of a higher or further education course
of compulsory school age
a volunteer or doing voluntary work
on a government or European programme
HMRC oversee the use of these rates and are entitled to visit your premises to check and see if you are complying with your NMW and NLW obligations. If they find you have short paid employees, you will have to compensate workers immediately and face possible fines for non-compliance. HMRC can also take an employer to court on behalf of employees.
If you are unsure of your obligations, we can check out what your position is and advise accordingly.