What are pay reference periods?
Pay reference periods are categorised by how often your employees are paid. For example, weekly, four weekly, monthly etc. A pay reference period cannot be longer than 31 days.
By law, a worker must be paid the minimum wage, on average, for all the time they have worked during the pay reference period.
What is included in calculations?
Certain payments must be included in minimum wage calculations. These include:
- Income tax and National Insurance
- Wage advances or loans
- Repayments of wage advances or loans
- Things the worker has paid for that are voluntary – i.e., meals on the job
- Any accommodation provided by the employer above the offset rate (£7 a day, or £49 per week)
- Penalty charges for a worker’s misconduct
What is not included in calculations?
Some payments made by workers must not be included when calculating the minimum wage. These include:
- Payments that should not be included for the employer’s use or benefit – for example, if they have provided travel to work
- Items that the employee has bought for work that they not been refunded for – i.e. tools, safety equipment, uniform etc.
How do I deal with disputes?
If one of your employees raises a dispute regarding the minimum wage, they must raise it with you first. If you find that you cannot resolve the issue, they can then submit a written request to view your payment records.
If these show that you the employee any money, you must pay them the arrears promptly.
If the issue still persists, the employee can then enlist the help of ACAS in regards to making a formal complaint, and they can also register a complaint with HMRC.
What is the National Living Wage?
The national living wage refers to the minimum pay per hour that most workers aged 25 and over are entitled to by law. The rate at which they are paid is same as long as they are over 25, but can differ if they are an apprentice.
It was introduced by George Osbourne to give the lowest paid UK workers a boost in earnings, with some commentators stating at the time that it could improve wages by up to 10.8%.
Who is entitled to it?
The criteria for the minimum living wage is the same as that for the minimum wage. The only stipulation is that the employee must be aged 25 or over to qualify.
Who is not entitled to it?
The criteria for the minimum living wage is the same as that for the minimum wage. The only difference is that those under 25 years of age do not qualify for it.
What is the current rate?
The current rate for the national living wage, as of April 2019, stands at £8.21 an hour.
What about apprentices?
Apprentices aged 25 or over, who are not in the first year of their apprenticeship, are entitled to be paid the national living wage alongside all other employees.
Apprentices aged between 19 to 24, who are not in the first year of their apprenticeship, are also entitled to be paid at the national minimum rate for their age.
For more details on apprentices, please see our dedicated Employer’s Guide to Apprenticeships.