Limited companyA Guide to the National Minimum Wage

Although the National Minimum Wage rates of 2020 are somewhat similar to 2019 Living Wage rates, the entitlements, however, are different. In any case, employers have to pay the designated National Minimum Wage to prevent a hefty penalty.

For the most part, the minimum amount of hourly wage depends on two underlying factors. The first one is their age, and the second one is whether they are performing service as an apprentice. Contrarily, in the UK, it does not matter how much of a staff an employer hires; they will still have to pay the mandatory wage to all of their workers.

NMW History: Follow the Trend

The National Minimum Wage or NMW started back on April 1, 1999, as per the National Minimum Wage Regulations of 1999 and the National Minimum Wage Act of 1998. Over the years, the UK’s NMW rate is gradually increasing. The rate has changed from 20 to 30 pence/hour in the last two decades.

Contrary to what might people think, the UK has a comparatively high minimum wage rate than other countries? Therefore, the adult minimum wage in the UK ranks seventh out of 22 countries in Europe, as of 2019. The countries that still have the highest minimum wages include Luxembourg, Germany, Belgium, France, and the Netherlands.

Who is Eligible for NMW?

Well, employees who are into school age fall into the minimum wage legislation. Yes, it also involves workers who may or may not be self-employed. In simple terms, businesses are required to pay the minimum wage rate to:

  • Homeworkers
  • Part-time or temporary workers
  • Casual workers
  • Disabled workers
  • Agricultural workers
  • Foreign workers
  • Trainees, apprentices, or individuals in a probation period
  • Offshore British workers performing services outside the UK

If you are still not sure whether you fall into a specific category, Remember, the government offers detailed guidance to facilitate British employers to calculate the hourly pay rate of employees as per the current National Minimum Wage.

In short, it highlights what payments you must add and subtract. Furthermore, employers will be able to find out the reference period when it comes to average pay and other accommodation benefits.

2020 National Minimum Wage

There are various stages when it comes to the National Minimum Wage (NMW). Primarily, it depends on your current age. For instance, if you are 25 or older, you will receive the NMW. Here are the current hourly rates of the minimum wage in the UK:

  • Young employees aged between 16 and 17 can get £4.55 per hour
  • Employees aged between 18 and 20 can get £6.45 per hour
  • Employees between 21 and 24 can get £8.20 per hour
  • Employees aged 25 or older can get £8.72 per hour
  • Apprentice minimum wage rate for employees under 19 is £4.15 per hour

Final Thoughts

You must begin by trying to ensure that you have calculated your NMW correctly. The majority of the employees have the right to get a written document that states their pay rate and how you should calculate it. Nevertheless, if you believe you are not receiving the minimum wage you should, do not hesitate to have a word with your employer.

We can help with all of your business and personal tax and financial planning needs. For a strategic review of your finances, please contact us.

Disclaimer: We don’t take any responsibility for actions taken based on above information. Please speak to our consultants if you need more information. This guide was written specifically for Smart Accounting clients. Some of the information contained in this guide might not be applicable if you do not have a business managed by Smart Accounting. By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details are correct at time of writing.

Our locationsWhere to find us?
London: Kemp House, 160 City Road, EC1V 2NX
Cambridge: 17 Parsonage Close, CB22 4SJ
Get in touchSmart Social links
Taking seamless key performance indicators offline to maximise the long tail.
https://smartacconline.b-cdn.net/wp-content/uploads/2020/03/Untitled-2.jpg

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close