Understanding national minimum wage law

Introduction

The national minimum wage (NMW) is a legal right which covers almost all workers in the UK. It became law on 1 April 1999 to prevent unduly low pay and also to help create a level playing field for employers.

The number of hours for which you have to pay your workers the NMW is calculated differently according to the types of work they do. The types of work for NMW purposes are time work, salaried-hours work, output work and unmeasured work.

As an employer you are legally required to keep sufficient records to show you are paying your workers at least the NMW. For many employers, existing payroll and business records will be sufficient and there will be no need to maintain separate records. For example, the pay records you keep for PAYE (Pay As You Earn) and National Insurance contributions and the related records may be adequate for NMW purposes.

This guide provides the background to the NMW and directs you to further information and advice.

Subjects covered in this guide

• Introduction
• National minimum wage rates
• Who is, and is not, entitled to the national minimum wage?
• What is included and not included?
• The four types of work
• Calculating hours worked and paid leave
• Records and reporting - best practice
• Enforcement and penalties

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