The NMW was introduced in the UK in 1999 and is a specified minimum hourly rate of pay to which most workers age 16 or over are entitled. All employers are obliged to pay the NMW, irrespective of their size.
The NLW came into force in April 2016 and is the minimum hourly rate of pay to which most workers aged 25 and over are entitled.
HMRC enforces the NMW and the NLW and requires employers to pay workers at least the NMW or NLW, dependant on their age, and to keep records to show that this is being done.
Failure to do so is a criminal offence. Along with pay arrears, employers in breach are fined twice the hourly rate per day per worker that they fail to pay the NMW or NLW. They can also be prosecuted under one of six criminal offences and face reputational damage from the "name and shame" list.
The "Name and Shame" list
The Government has fined and "named and shamed" 179 businesses for failing to pay their workers the National Minimum Wage (NMW). Among the "named and shamed" are Wagamama, TGI Friday and Marriott Hotels. The "name and shame" list can be found on the Government website.
The Government's action is a reminder to all employers about the consequences of failing to correctly pay their workers the NMW or the NLW.
Employers should ensure that they are paying their workers the correct amount and need to be clear about what counts as pay towards the NMW and the NLW.
How can an employer calculate whether NMW / NLW has been paid?
In summary:
What is counted as pay towards the NMW / NLW?
It is important to remember that not all remuneration earned in the relevant pay period counts towards the NMW / NLW and some payments reduce the amount of pay that is to be taken into account.
The following elements of pay count towards the NMW / NLW:
The following elements of pay do not count towards the NMW / NLW:
For further information please contact Ashfords' Employment Team.