Exceptions to The National Minimum Wage

The National Minimum and Living Wages – Who Gets Them?

As an outsourced payroll services provider, we are often asked questions about the National Minimum and National Living Wages, not least regarding who gets what since the introduction of the National Living Wage earlier this year. This article summarises who gets what and also looks at the exceptions, because as with any complex piece of legislation, there are exceptions.

Who Qualifies?

Almost everyone who is at school leaving age (defined as the last Friday in June of the school year they turn 16 in) qualifies for the National Minimum Wage, which is the minimum hourly rate that workers must be paid. The National Living Wage is higher than the National Minimum Wage, but is only payable to those aged 25 or over. To put it another way, the National Minimum Wage for those aged 25 or over is the National Living Wage.

The current hourly rates (as of 1st April 2016) are:

  • 25 and Over = £7.20*
  • 21-24 = £6.70
  • 18-20 = £5.30
  • Under 18 = £3.87
  • Apprentices = £3.30

(*This is the National Living Wage All rates for those younger than 25 are The National Minimum Wage.)

Apprentices receive the apprentice rate if they’re under 19 or in the first year of their apprenticeship. If they are 19 or over and have completed the first year of their apprenticeship, then they receive the minimum wage for their age.

This means that all of the following qualify for the Minimum Wage (or the Living Wage if aged 25 or over):

  • part-time workers and this includes Saturday jobs for those still at school who are of school leaving age
  • casual labourers,
  • agency workers
  • workers and paid by the number of items they make
  • apprentices
  • trainees, workers on probation
  • disabled workers
  • agricultural workers
  • foreign workers
  • seafaring workers
  • offshore workers

Even if you have a contract of employment (probably one from before 1st April 2016) which states an hourly rate of less than the NLM or the NMW, such a contract is not legally binding and is superseded by the minimum and living wage legislation.

What are The Exceptions?

There are exceptions, and the following are not entitled to the National Living Wage or the National Minimum Wage:

  • Self employed people
  • Company Directors
  • Voluntary Workers
  • Workers on a government employment programme,
  • The armed forces
  • Family members of the employer who are 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. Au Pairs fall into this category.
  • 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-apprenticeship’ 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
  • Share fishermen
  • Prisoners
  • People living and working in a religious community
  • A student doing work experience as part of a higher or further education course
  • Work shadowing

The national living and minimum wages change every year – but at different times!

Just to confuse things, the National Minimum Wage changes every October BUT the National Minimum Wage changes every April. If we run your payroll, you won;t be caught out as we will notify you a month in advance about the changes so that we can update your system. Our system also notifies you automatically when an employee’s birthday brings them into a different hourly rate category. In other words, we make sure you are fully compliant at all times.

If you’re in any doubt, Contact Us

Most of our clients run small businesses and they use us because they don’t have a separate finance or HR Department to run their own payroll service. They value our services because we sort everything out with their payroll so they can run their businesses, knowing their payroll is under control.

Given that non-compliance with Living and Minimum wage legislation – even accidental non-compliance – can lead to naming and shaming and fines (and even director disqualification in extreme cases), then please contact us or call us on 0121 422 0550 for a free initial chat.

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