Experts in Business

Legal compliance is a cause of anxiety for many small business owners, and the rules relating to the National Minimum Wage is a classic example.

Refusal to pay the national minimum wage is a criminal offence which could result in a fine or even a prison sentence. The National Minimum Wage applies to almost all workers. A recent study by the TUC revealed that overseas female workers are the most likely to be paid less and to help redress the balance the Government has set up a free help line for vulnerable workers. If employers fail to do so, they may be taken to tribunal by their staff. In addition, Her Majesty’s Revenue and Customs (HMRC), has the right to investigate and serve an enforcement notice to cover any under-payments. However, compliance is not as straightforward as simply ensuring the different rates apply to different ages. In addition, the number of hours you need to pay your workers the minimum wage is calculated according to the work they do and can include on-call hours.

To ensure that you are not breaking the law, your first step should be to check on all of the ages of your employees. Any staff aged under 18, who are no longer of compulsory school age should be paid a minimum of £3.53 an hour. Whilst workers between the ages of 18 and 21 get £4.77 an hour and those aged 22 and over should be paid £5.73 an hour. When an employee has a birthday that takes their age to the next threshold, remember to adjust their rate. Eligible workers include homeworkers, part-time staff, casual workers and agency staff. Exceptions include the truly self-employed, voluntary workers, apprentices and people employed in a Jobcentre Plus Work Trial. Remember some payments and expenses are not calculated within the National Minimum Wage. If you supply accommodation to your workers, you may offset some of this, though there is a limit on this of £31.22 a week.