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THE NATIONAL MINIMUM WAGE
 

The national minimum wage is an important cornerstone of Government strategy aimed at providing employees with decent minimum standards and fairness in the workplace. It applies to nearly all workers and sets hourly rates below which pay must not be allowed to fall. It helps business by ensuring companies will be able to compete on the basis of quality of the goods and services they provide and not on low prices based predominantly on low rates of pay. The rates set are based on the recommendations of the independent Low Pay Commission.

The National Minimum Wage has increased again in October 2005

The minimum wage is a legal right which covers almost all workers above compulsory school leaving age. There are different minimum wage rates for different groups of workers as follows:
  • The main rate for workers aged 22 and over. On 1 October 2005 this rate was raised to 5.05 an hour, from 4.85
     
  • The accredited training rate for workers aged 22 and over who are receiving accredited training in the first six months of a job with a new employer. On 1 October 2005 this rate of the minimum wage was raised to 4.25 an hour, from 4.10.
     
  • The development rate for 18-21 year olds. On 1 October 2005 rate of minimum wage was raised to 4.25 an hour, from 4.10.
     
  • The development rate for 16-17 years olds. This rate is 3.00 an hour.
     

It is important to note that these new rates only apply to pay reference periods beginning on or after the date they came into law.

16 and 17 year olds rate

The Government accepted the Low Pay Commission's recommendations for a new rate for 16 and 17 year olds (above compulsory school leaving age)* in their 2004 report.

      3.00 per hour from 1 October 2004

NB: 16 and 17 year old apprentices are exempt from the young workers rate.

*Compulsory School Age

  • In England and Wales: a person is no longer of compulsory school age after the last Friday of June of the school year in which their 16th birthday occurs.
     
  • In Northern Ireland: a person is no longer of compulsory school age after the 30th June of the school year in which their 16th birthday occurs.
     
  • In Scotland: pupils whose 16th birthday falls between 1st March and 30th September may not leave before the 31st May of that year. Pupils aged 16 on or between 1st October and the last day of February may not leave until the start of the Christmas holidays in that school year.

For further information or if you think you are being underpaid, call the minimum wage helpline on 0845 6000 678

Fair Piece Rates

From October 2004, the Government proposed that employers have to pay their workers the minimum wage for every hour they work or a fair piece rate initially set at 100% of the minimum wage. The rate was increased to 120% of the minimum wage in April 2005 at which point most homeworkers will receive the minimum wage.

The Government has produced guidance pdf (47Kb
) on proposals to introduce fair piece rates for output workers, including homeworkers. A partial Regulatory Impact Assessment pdf (82Kb) estimating the costs and benefits of these proposals is also available.

 

To check on how the National Minimum Wage applies to you (or your staff),  telephone the National Minimum Wage Helpline on 0845 6000 678. This is also the number to ring if you think you are being underpaid and wish to make a complaint. You may also email the helpline from the HM Revenue and Customs NMW website. All complaints about underpayment of the National Minimum Wage are treated in the strictest confidence and callers may remain anonymous if they wish to do so.

You may also be interested in the following:

Government evidence to the Low Pay Commission - November 2004 (369Kb)

A Regulatory Impact Assessment pdf (73Kb) has been produced which considers the impact of proposals to increase the adult and development rates of the NMW in October 2004.

The Government has submitted evidence pdf (316Kb) to the Low Pay Commission on the advantages and disadvantages of a minimum wage for 16 and 17 year olds and on the proposed uprating of the minimum wage in 2004.

The Government response to the Consultation pdf (16Kb) on proposed amendments to the National Minimum Wage Act in the Employment Relations Bill has been published.

The Government published the fourth report (1.15Mb) of the Low Pay Commission, together with a written statement to Parliament and its response to the Commission's recommendations (24Kb) on 19 March 2003.

The Government produced a Regulatory Impact Assessment (19Kb) to estimate the costs and benefits to the economy of the increases in the National Minimum Wage rates in October 2003. 

National Minimum Wage: the hairdressing sector (welsh) (163Kb)
National Minimum Wage: the hairdressing sector (113Kb)
National Minimum Wage: a short guide for the hairdressing sector (101Kb)
National Minimum Wage: a short guide for workers (34Kb)
National Minimum Wage: a short guide for workers (Welsh) (49Kb)
National Minimum Wage: a short guide for employers (32Kb)
National Minimum Wage: a short guide for employers (Welsh) (48Kb)
National Minimum Wage: a short guide for young workers (34Kb)
National Minimum Wage: a short guide for young workers (Welsh) (36Kb)
National Minimum Wage: a short guide Bengali (113Kb)
National Minimum Wage: a short guide Gujarati (108Kb)
National Minimum Wage: a short guide Punjabi (95Kb)
National Minimum Wage: a short guide Tamil (105Kb)
National Minimum Wage: a short guide Urdu (2012Kb)
National Minimum Wage: a short guide Chinese (354Kb)
National Minimum Wage: a short guide Arabic (65Kb)
The minimum wage and 'therapeutic work (339Kb)
National Minimum Wage Annual Report 2004/2005 (164Kb)
History of the National Minimum Wage
Further Guidance on the National Minimum Wage
Low Pay Commission Website
Other National Minimum Wage links
National Minimum Wage Act and Regulations

If you have an unanswered question on general policy you can e-mail the national minimum wage policy team here at the DTI. However, queries about the application of the national minimum wage or about individual cases should be directed to the helpline.

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Last updated 20 January 2006