• National Minimum Wage FAQs

► National Minimum Wage FAQs

Some of the key facts about the National Minimum Wage.

• How much must you be paid?
• Who is entitled?
• What about part-time staff?
• Is anyone exempt from the NMW?
• Does all pay count towards the NMW requirements?
• Can bonuses be counted towards the NMW?
• Can accommodation count towards the NMW?
• More resources and information

How much must you be paid?

The NMW is currently set at £6.08 per hour for workers aged 21 and over. For workers aged 18 to 20 inclusive the minimum wage is £4.98. For workers under 18 but above compulsory school age £3.68 per hour. For apprentices aged under 19 £2.60 per hour, for apprentices aged 19 and over but in the first year of their apprenticeship £2.60 per hour. Figures are correct at October 2011, up to date rates can always be found on the HMRC website. 

Who is entitled?

The NMW legislation applies to “workers”, defined to cover not just employees but also anyone working under a contract where the individual undertakes to do work, or perform personally any work or services for another party, and where the other party is not a client or customer of any profession or business carried by the individual.

This definition means that freelancers and subcontractors will have to be paid the NMW unless they are genuinely in business on their own account. The National Minimum Wage act has also extended the definition of “worker” specifically to cover agency workers and home workers.

What about part-time staff?

Part-time and casual staff are entitled to the NMW on exactly the same terms as full-time staff.

Is anyone exempt from the NMW?

Please bear in mind that rules for this are quite specific please visit the Business Link website for more information. The following types of workers may be exempt:

• trainees receiving assistance from the European social fund;
• students on “sandwich courses” in conjunction with higher education courses;
• people living and working part of a family such as au pairs;
• family members who live in the family home and participate in the running of the family business;
• charity workers who are volunteers and only receive expenses rather than a regular wage;
• trainees on government funded training schemes are exempt when they do not receive wages from the employer.

Does all pay count towards the NMW requirements?

No. Benefits in kind (such as company cars) and payments by voucher (including luncheon vouchers) will not count towards payment of NMW. Furthermore, the Regulations stipulate a number of cash payments which will not count towards the NMW. These are:

• reimbursement of expenses;
• unsociable hours payment;
• overtime premiums;
• location payments such as London weighting;
• allowances for working in unpleasant or dangerous conditions;
• tips, unless they are paid through payroll;
• payments made where a worker performs over and above his normal duties;
• stand by or call out payments; loans and advances of wages;
• pension payments;
• court and employment tribunal awards;
• redundancy payments;
• awards under suggestion schemes.

What about bonuses – can they count towards the NMW?

Yes. Bonuses and other incentives can count towards the NMW. However, an annual bonus can not be used to count towards the NMW for the whole year round. It will count during the pay reference period in which it is paid and for the previous reference period. For example if an annual bonus is paid in December and the pay reference period is one month, one twelfth of the bonus can count towards the NMW for November and the remainder will count towards the NMW in December.

Can accommodation count towards the NMW?

There is a daily allowance of £4.73 for the number of days which accommodation was provided (with the maximum weekly offset figure of £33.11),

More resources and information

• Fact sheets including one on the National Minimum Wage
• Useful links page