Law guide: Employment

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Pay and the National Minimum Wage

Pay and the National Minimum Wage

Pay statements

An employer must ensure that all employees are provided with written pay statements showing:

  • Their gross pay
  • All deductions made
  • Their net pay and, if paid in more than one way, the amounts and method of each part payment

The National Minimum Wage

The minimum wage is a legal right which covers almost all workers above compulsory school leaving age. There are different minimum wage rates for different groups of workers. From 1 April 2021:

  • The rate for workers aged 23 and over is £8.91 an hour (this is known as the National Living Wage).
  • The rate for workers aged 21-22 is £8.36 an hour.
  • The rate for 18-20 year olds is £6.56 an hour.
  • The rate for 16-17 (under 18) year olds is £4.62 an hour.

There are different rates for apprentices (see below).

The rate of the accommodation offset is £8.36 per day and is updated every April.

Most workers in the UK, including homeworkers, agency workers, commission workers, part-time workers and piece workers are entitled to the minimum wage and refusing to pay it is a criminal offence. Dismissing a worker because he or she becomes eligible or complains about not being paid the National Minimum Wage will constitute unfair dismissal.

You may be required to prove that you are paying the National Minimum Wage and this means that you must keep sufficient records and allow access to them if required.

Special rules for apprentices

Some apprentices qualify for the National Minimum Wage at a different rate. There are two types of apprentice:

  • those working under a 'contract of apprenticeship', which is primarily on-the-job training; and
  • those working under an 'apprenticeship agreement', which is a contract for services and is primarily a job rather than training.

Both types of apprentice who are under 19 or in the first year of their apprenticeship are entitled to £4.30 an hour.

Apprentices aged 19 or over who have completed their first year receive the National Minimum Wage according to their age.

What payments do not count towards the National Minimum Wage?

  • If you pay for or subsidise meals, uniforms, private health care, motoring costs or other 'benefits in kind' for your employees, these don't count towards the calculation of the National Minimum Wage, even if they are taxed as income
  • Tips, gratuities or service charges paid (even if paid through the payroll)
  • Expenses paid to your employee for travelling to a temporary workplace, which is treated by you as deductions from earnings under section 338 of the Income Tax (Earnings and Pensions) Act 2003. i.e. if you operate a scheme where your employees sacrifice a proportion of their salary that is replaced with a 'tax free' expenses payment for travelling to a temporary workplace.
  • Loans to your employees
  • Pension payments
  • Payment for working overtime
  • Retirement lump sums
  • Redundancy payments

Guaranteed pay

In some cases employees who are laid off may be entitled to payment. A lay off is not the same as a redundancy and the regulations covering each situation are very different. Advice should be sought to ensure the correct payments are made.

Further information

See Calculating the minimum wage, for more information.

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