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4. Rights to pay and conditions
The national minimum wage
[ch 4: page 99]Under the National Minimum Wage Act 1998, workers have the right to a minimum wage. The detail of national minimum wage law is found in regulations, the latest set of which, the National Minimum Wage Regulations 2015 (the NMWR 15) came into force on 6 April 2015. These regulations consolidate 28 separate statutory instruments enacted to deal with the national minimum wage since its introduction in 1999.
Here are the national minimum wage rates in force from 1 April 2017:
• £7.50 an hour for workers aged 25 and older (the government calls this rate the “national living wage”);
• £7.05 an hour for workers aged 21 to 24;
• £5.60 an hour for workers aged 18 to 20 (called the “youth development rate”); and
• £4.05 an hour for workers aged 16 to 17.
Following the introduction of the national living wage on 1 April 2016, the NMW rate is now reviewed each year in April. Previously, it was reviewed each October.
Although called the “national living wage”, the government’s new hourly rate for workers aged 25 or older is simply an extra age tier to the existing national minimum wage regime (The National Minimum Wage (Amendment) Regulations 2016). Throughout this booklet, references to the “national minimum wage” include the statutory national living wage rate.
The Living Wage Foundation
The government’s national living wage for workers aged 25 and older must not be confused with the voluntary living wage rate set each year by the Living Wage Foundation and the Greater London mayor, which is based on an independent assessment of the amount people need to get by. This rate is currently set at £8.45 an hour outside London and £9.75 an hour in London, which has a higher cost of living. It applies to all workers aged over 18.
Following successful campaigning, many employers have agreed to pay this higher rate. In addition, the terms of some service contract tenders make payment of the voluntary living wage rate a condition of a successful bid. There is more information on the Living Wage Foundation website: www.livingwage.org.uk. Employers who claim to pay the voluntary living wage are expected to implement the rate as soon as possible and at least within 6 months, so that all employees receive the new rate by 1 May of the following year.
In Scotland, the Scottish Government’s Public Sector Pay Policy for Staff Pay Remits states that every worker whose pay is controlled directly by the Scottish Government should receive at least the Scottish living wage, which is based on the rate set by the Living Wage Foundation. In Scottish public procurement, priority must be given to bidders who commit to pay the living wage rate.
There is a separate apprenticeship rate for apprentices aged 16 to 18 and those aged 19 or over in their first year of apprenticeship (after which the normal age band rates set out above apply). From 1 April 2017, the apprenticeship rate is £3.50 an hour. For an employer to be allowed to pay the apprenticeship rate without breaking national minimum wage law, there must be a valid Apprenticeship Agreement in place (see Chapter 2 page 57: Apprentices).
An employer providing accommodation can count some of its value towards the national minimum wage —up to £6.40 per day or £44.80 per week (from 1 April 2017). This is known as the “accommodation offset”.
Guidance on the accommodation offset is available online at: https://www.gov.uk/national-minimum-wage-accommodation.
LRD Booklet, Pay: getting it right — bargaining information for union reps (www.lrdpublications.org.uk/publications.php?pub=BK&iss=1762)
LRD’s pay and conditions journal Workplace Report contains regular updates on pay and working time cases, as well as equal pay developments (www.lrdpublications.org.uk/publications.php?pub=WR).