What is a ‘Minimum wage’?

The minimum wage also referred to as the ‘National Living wage’ in the UK was introduced in 1998. It is a law that recommends and enforces a minimum salary of payout per hour for a worker. As of 2019, the minimum wage for workers in the UK stood at £8.21 per hour.

It is minimum pay for workers between the age of 18 and 24 years old, while those over 25 years are paid at least £0.90 more than that per hour minimum wage.

The minimum wages in UK were set based on surveys conducted by Loughborough University’s Centre for Research in Social Policy (CRSP) which studies minimum wages in the country.

The minimum wage is also enforced by other means such as fines for employers who do not abide to it or fail to apply laws regarding minimum pay per hour.

Minimum Wage Law and its Effects on Businesses: The minimum wage law was a way of ensuring that all workers have some minimum pay regardless of their profession. This minimum wage law was implemented to counter-act the effects of inflation that were being experienced in different parts of UK at that time. Inflation then as it is now, served as a way for employers to cut costs and reduce salaries without seeming too much out of place.

However, minimum wages have been met with mixed reactions from people. While some say minimum wage has not only increased the minimum pay of workers but also improved their lives, others argue that it’s a law that is being undermined by inflation.

For minimum wage to be effective, it needs to take inflation into consideration. But in most cases, minimum wages are set without taking this factor into account and the effects of minimum pay on businesses is felt very hard by some entrepreneurs who fail to adjust for that accordingly.

The minimum wage law ensures that all workers get paid a fair amount for their work. However, minimum wages in the UK may not be a solution to all business problems because inflation is still very real and minimum wage law alone cannot counter it.

Minimum Wage Law has been met with mixed reactions from people but its role of ensuring workers get paid for their hard work has been recognized by many around the world.

Who is entitled to a minimum wage?

Workers above the age of 25 are entitled to a minimum wage. To enumerate, there are certain types of occupation which are not entitled. For example, apprentices under 19, self-employed people, voluntary workers, etc. The complete list is found here.

For workers below 25, the following hourly rates as minimum wage apply.

  • 21 to 24 years – £7.70 / hour
  • 18 to 20 years – £6.15 / hour
  • Apprentice – £3.90 / hour

What is minimum wage in the UK?

The minimum wage for workers over 18 years has been set at £0.90 more than minimum pay per hour of those below age 25 as part of a plan to increase minimum wages for this group from £11.00 / hour to £12.20 by 2020, and then bring it up again to £13.00 / hour by April 2020 and to £14.15 in October 2019, then up again at the end of 2020 from £12.20 per hour minimum pay for workers under 25 years old to a minimum wage of over £13.90 an hour

It is also called ‘national living wage’ because it was introduced as a way to ensure minimum pay for everyone, and not just those under age 25.

The minimum wage was brought into the UK in 1998 by Labor government led by Tony Blair because of inflation that was taking place at that time. The minimum wage rate varies between different sectors depending on their economic activity such as services, construction or retailing which includes minimum wage.

Can employers pay less than the minimum wage?

It is a criminal offense. Important to realize, that such a law is implemented to protect employees. Attempting to fake payment records or paying less is an offense.

The point often overlooked is the payment period. Technically, it is referred to as the ‘pay reference period’. Employers need to ensure that the pay reference period is not more than 31 days.

How is employee disputes over national living wage handled?

The HM Revenue and Customs (HMRC) is authorized to handle such disputes. Workers can raise complaints with the HMRC. At any given time, HMRC officers will have the right to investigate wage payments from employers. Employers are mandated to save employee payroll records for a minimum of 3 years.

Thus, payroll records become a means of proof for the employers to showcase to HMRC. If the HMRC finds the employer is not paying the right wage to workers, they can enforce legal action against the employer.

How to calculate the national minimum wage?

The government of the UK has an online calculator to help employees calculate their wages. All things considered, employers can protect the employee’s interests by investing in payroll software.

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Written by Siva

I write & describe the value & benefits delivered by Paperhift's rota planning, staff time tracking, and employee payroll management software. Especially useful for Shift Planners, Rota Managers, Team Admins, and HR Teams 🙂