What is the minimum wage?

There is a difference between the ‘National Living Wage’, the ‘National Minimum Wage’ and the ‘Living Wage Foundation’.

In this article we explore and answer ‘what is the minimum wage?’, how this affects your business and employees, and the rules for apprenticeships.

First of all it is important to differentiate and understand how the phrase ‘minimum wage’ is commonly used in conversations and the press when understanding what the minimum wage is.

National Minimum Wage (NMW)

The ‘National Minimum Wage’ applies to people aged under 23 or an Apprentice and is set by the government every year.

National Living Wage (NLW)

The ‘National Living Wage’ applies to people aged 23 or over and is set by the government every year.

Living Wage Foundation

The ‘Living Wage Foundation’ is the organisation at the heart of the independent movement of businesses and people that campaign for the idea that a hard day’s work deserves a fair day’s pay. The Living Wage Foundation is set at a higher £ value than the governments National Minimum Wage and National Living Wage and they claim it is ‘the only UK wage rate that is voluntarily paid by almost 9,000 UK businesses who believe their staff deserve a wage which meets everyday needs’
Read more at https://www.livingwage.org.uk/

Annual changes to rates of pay

Each year the Government sets the National Living Wage and National Minimum Wage. This typically comes into effect on the 1st April annually and is based on the age of an individual and whether you are an Apprentice or not.

We have detailed the current rates of pay applicable to 31st March 2022 from the https://www.gov.uk/ website, correct as of 17th November 2021.

Apprentices

It is important to note that Apprentices are only entitled to the apprentice rate if they are either:

• Aged under 19
• Aged 19 or over and in the first year of their apprenticeship

The apprenticeship rate does not apply to Higher Level Apprenticeships.

Should I just pay the minimum wage?

Whilst we appreciate cash flow is fundamental to every business, it is also important businesses recognise the contributions made by an employee. Where would you be without them?

Simply paying the minimum wage might feel like you are keeping costs to a minimum, but how does the employee feel with this arrangement?

Employees should be recognised and rewarded for the support they provide and it is worth spending time fully understanding how to create a wage, commission or bonus structure. Remember people are not always motivated by money.

To find out more about wage, bonus, commission structures and employee retention programmes, contact our team who will be able to share ideas with you.

Call for HR Help and Support

Employment Law can be complicated and we would advise any employer that is unsure what the Minimum Wage is and how it applies to employees or apprentices, to contact us and check first.

At NORI HR and Employment Law we take away the stress and uncertainty of HR and Employment Law. You can contact us, or take advantage of our HR Clinic.

Blog by Nori HR and Employment Law

HR Services