Payment of wages and salaries 

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Summary

The National Minimum Wage Act 1998 obliges employers to pay workers at least the national minimum wage. Employees are also entitled by statute to be given written details of their pay. Other than these statutory obligations, how or when an employee is paid is determined by the express terms of the employee's contract of employment and/or any terms which may be implied into the employee's contract of employment such as the terms of a Wages Order.

National Minimum Wage
NMW rates per hour from 1 October 2009

• Main rate £5.80
• Development rate (18-21 years) £4.83
• Age 16-17 £3.57

The National Minimum Wage applies to most workers, including homeworkers, agency workers, commission workers, part-time workers, casual workers and pieceworkers. The National Minimum Wage does not apply to apprentices, and from 1 October 2006 there is no age limit on the apprenticeship exemption.

It is a criminal offence for an employer to refuse to pay the NMW whether or not the employee is still in its employment. Failure to do so can result in a fine of up to £5,000. The enforcement agency for the national minimum wage is HM Revenue and Customs (HMRC).

Questions and Answers

Question
Can I ask a worker to agree to be paid less than the NMW if it means I can afford to keep him or her on?
Answer
No.

Question
What payments constitute wages?
Answer
All cash payments or benefits such as vouchers and stamps which can be used as cash are deemed to be wages but this is different from the definition of "pay" under the National Minimum Wage Act 1998.

Key Facts

• The National Minimum Wage Act 1998 obliges employers to pay workers at least a national minimum wage. From 1 October 2009, the main (adult) rate is £5.80 per hour for those aged 22 years and over and a development rate of £4.83 per hour for those aged 18-21 years. The rate for 16 and 17-year-olds is £3.57.
• The manner and time of an employee's pay may be determined by the express terms of an employee's contract, by any terms implied into the contract such as the terms of a Wages Order, or by custom and practice.
• Any unilateral change by the employer to the rate, method or interval of an employee's pay may amount to a breach of contract.