All workers are entitled to be paid at a rate which is not less than the national minimum wage, currently (per hour) £3.40 for 16- and 17‑year‑olds, £4.60 for 18- to 21‑year‑olds and £5.52 for those aged 22 and over. These rates rise every year, so from 1 October 2008, they will be £3.53, £4.77 and £5.73 respectively.
An individual's hourly rate of pay is determined by reference to the total remuneration they receive in a "relevant pay reference period" and the total hours they work in that period. The pay reference period is one month (or a shorter period if the worker is paid by reference to such a shorter period).
Remuneration included in the calculation of hourly pay includes basic salary and incentive payments such as commission and bonuses. Tips and gratuities paid through the payroll system are also included - but note that this doesn't extend to tips that are distributed by a troncmaster.
The only non-cash benefit that can be taken into account is where the employer provides accommodation as a benefit in kind, although this is limited to a maximum amount of £4.30 per day (rising to £4.46 in October 2008).
If the worker pays rent or other charges in excess of this limit, they must be deducted from the minimum wage calculation, so will reduce the level of pay.
Other charges imposed on employees - for example, for meals or uniforms - must also be deducted from the calculation.
If workers are paid below the minimum wage, they are able to bring a claim against their employer, and HM Revenue & Customs may also take enforcement action.
➔ Katee Dias
Goodman Derrick
020 7404 0606
kdias@gdlaw.co.uk