Let us be your HR department 
and take the challenge out of  
your people management 
0115 936 1250 
Not the most exciting blog in the world but critical information to help you remain on the right 
side of the law when it comes to pay. 
 
The National Minimum Wage (NMW) is the wage that most employees are entitled to, as 
a minimum, by law. The actual rate of pay depends on their age and if they are an apprentice. 
 
On 1st April 2016 the Government introduced the NATIONAL LIVING WAGE, for all working 
people aged 25 years and over. This remains at £7.20 per hour. 
Rates of pay (NMW) 
 
It is important to note that these rates, which came into force 1 October 2016, apply to pay 
reference periods beginning on or after that date. 
 
The rates from 1 October 2016 are: 
 
£7.20 per hour - 25 yrs old and over 
£6.95 per hour - 21-24 yrs old 
£5.55 per hour 18-20 yrs old 
£4 per hour - 16-17 yrs old 
£3.40 for apprentices under 19 or 19 or over who are in the first year of apprenticeship. 
 
The key points to note are ; 
 
Most workers who are over the school leaving age will be entitled to the National Minimum Wage/National Living Wage. 
HM Revenue and Customs (HMRC) have the power to take any employer to court for failure to pay the National Minimum Wage or the National Living Wage. 
Keep a note of the dates when your employees who are under 25 will be eligible for an increased NMW band or who need moving to the NLW. This pay increase only takes effect from the start of the next pay period after their birthday. So if their birthday is on 27th June and the next pay period starts on 1st July, the pay increase will be from 1st July. 
 
Exemptions 
 
There are a number of people who are not entitled to the NMW/NLW. They are; 
 
Self employed people 
Volunteers 
Company Directors 
Family Member exemption. (If you think this may apply please seek advice) 
 
Failure To Comply With the Legislation 
 
If HMRC find that an employer has not paid the correct NMW/NLW raets to an employee/employees, they can issue a notice of arrears plus a fine for non payment of the correct rate to the employee(s). 
 
For failure to comply with the National Living Wage, the penalty will be 200% of the amount owed unless the arrears are paid within 14 days. The maximum fine per worker is £20,000, however employers who fail to pay will be banned from being a Company Director for up to 15 years. 
 
Just finally - what is the difference between the National Living Wage and the Living Wage? 
 
The National Living Wage, as described above, is set by statute and is the law. As an employer you don't have any option but to pay it (unless you wish to be the focus of HMRC of course) 
 
The Living Wage is an independently set rate by the Living Wage Foundation and is based on the cost of living in the United Kingdom. Employers can choose to pay this if they wish. 
 
Share this post:

Leave a comment: