The minimum hourly wage that most workers in the UK should get varies according to their age and whether they are apprentices. Discover the rates and where to seek assistance if you believe you are being paid less than the national minimum wage.
National minimum wage and its eligibility
The National Minimum Wage is the legal minimum wage that workers in the United Kingdom must be paid at. The rate is determined by your age and employment status. The rates are generally changed on 1st of April every year. You must be at least
- At a school leaving age to qualify for the National Minimum Wage.
- Age 23 to qualify for the National Living Wage - The minimum wage will still apply for workers aged 22 and under.
There is a change in the minimum wage and living wage rates week commencing1 April 2022, which are as follows
| Age | Current rates |
|---|---|
| 23 and above | £9.50 |
| 21 to 22 | £9.18 |
| 18 to 20 | £6.83 |
| Under 18 | £4.81 |
| Apprentice | £4.81 |
Who are all eligible for the National Minimum wage?
Contracts involving payments less than the minimum wage are not legally enforceable. The workers retaintheir right to the National Minimum Wage (NMW) or the National Living Wage (NLW). Additionally, as a worker, you are entitled to the correct minimum wage if you are:
- Part–time worker
- Agency worker
- Casual labourer, like someone hired for a day
- Apprentice
- Probationary worker or a Trainee
- Workers and home workers paid based on the number of items made by them.
- Agricultural worker
- Disabled worker
- Foreign worker
- Offshore worker
- Seafarer
Calculating the National Minimum Wage
Your average hourly pay is calculated over a period referred to as the 'pay reference period.' This is often the period for which you are actually paid. For example - If you receive your payon a weekly basis, your pay reference period is week one (W1); if you are paid on a monthly basis, your pay reference period is month one (M1). A pay reference period cannot exceed 31 days.
The pay that matters may not be limited to the payment received during the pay reference period, but it also covers the pay earned by you during that period, but not received until the next one. Overtime pay will also taken into account.
To determine if you are receiving the NMW, you must first understand which components of pay count towards the NMW. Additionally, you must be aware of the hours for which you are entitled to payment. This is determined by the following four categories of work defined by the NMW guidelines:
- Hourly payment
- Annual salary payment
- Payment made based on task or piece of work done
- Paid in other ways
What to do if you think you are being paid less than the correct minimum wage?
If you believe you have been paid less than the minimum wage required for your age, speak with your employer. If this does not resolve the issue, you may request to inspect and copy your payment records.
Alternatively, you can contact one of the following workplaces for free and can take assistance in resolving your payment dispute:
- Contact the ACAS telephone helpline at 0300 123 1100 or visit the ACAS website (England, Wales, and Scotland).
- Contact the Labour Relations Agency's Helpline at 0289 032 1442 or visit their website (Northern Ireland).
Additionally, you can lodge a complaint with HMRC regarding your employer.
If HMRC determines that you have been paid incorrectly, your employer is required to backdate your pay and pay you any money owed to you and pay HMRC a penalty for paying you less than the minimum wage.
Discretionary bonuses
Discretionary pay, or a discretionary profit-sharingbonus, is a payment that is not guaranteed or expected from your employer. This is a mechanism used by umbrella companies to pay their workers. The umbrella company will first pay the national minimum wage or national living wage for the hours worked, deduct their costs, and then pay the remaining amount received from the agency/client as a discretionary profit-sharing bonus. The assignment rates the umbrella companies receive from the worker’s agency/client will usually vary from assignment to assignment but will always be sufficient to pay NMW/NML. The contract is therefore structured to allow flexibility in calculating the bonus, which allows the worker to undertake series of employment under a single contract.
How are discretionary bonuses calculated?
Discretionary bonuses are determined at your employer's discretion; they may apply any criteria they like, if reasonable and fair.
The umbrella company will follow the below process to calculate the discretionary bonus:
- They will determine the number of hours worked based on the signed weekly or monthly time sheet and multiply this by the hourly rate to calculate the charge to the agency.
- National Minimum Wage (NMW) will be calculated for the number of hours worked.
- Holiday Pay is calculated based on 12.07% of the NMW.
- Employer’s pension contribution is calculated on NMW where the employee has not opted out from autoenrollment.
- After that the apprenticeship levy at 0.5% is applied.
- Employers NIC is calculated and applied on the NMW.
- Once the above stepsarecomplete, the umbrella company will deduct their margin from the figure calculated at step one.
- The remaining balance of what has been calculated in the first seven steps is paid as a bonus/commission.
- The balance is a gross figure which includes Employers’ NICs, apprenticeship levy and Pension contributions, and from which employee’s NICs and income tax is deducted to arrive at a net pay figure.
When is it appropriate to file a claim against your employer?
Yes, you may file a claim against your employer if the following applies:
- You have not been paid for contractual bonus pay (as long as you have met any clauses included, such as having worked the full year)
- You have not been paid in bad faith for discretionary bonus pay (other employees who performed similarly got a bonus, but you did not, for personal or discriminatory reasons)
- You have not been paid a bonus due to the time spent on maternity leave during the first six months of the year.
An employer cannot pay you less than the National Minimum Wage. So, double-check your pay and speak with your employer to ensure you are getting the wages to which you are entitled.
How can DNS Umbrella help?
You can join dnsumbrella to receive payments on time and in accordance with HMRC regulations. You are entitled to all statutory employment benefits such as statutory sick payments, maternity/paternity pay and every benefit you are entitled to. We handle and take care of all your tasks, including administration, invoicing, payment collection and payroll processing.
If you have any questions abouthow umbrella works, please speak to one of our specialists by calling us on 020 3500 2615 or email us at info@dnsumbrella.co.uk..