Not all courses are 'accredited', generally they are held at institutions that receive government funding or courses that are government sponsored. An employer will be made aware of the status of a course before enrolment. The pay rate only applies to the first six months, thereafter the normal 22+ rate applies. Apprentices aged 16 -17 are exempted from the 'young workers' rate.
Apprentices
From August 2009 the minimum wage for an apprentice is £95.00 per week (previously £80.00 per week). The rise is an attempt to boost vocational education and should benefit around 26,000 apprentices. The average wage for an apprentice is over £170.00 per week but many do take home the minimum.
Compulsory School Age
A 16 year old is only classed as a young worker once they have exceeded the compulsory school age. Just to make things more complicated, as usual, each area of Britain defines this differently.
England and Wales: after the last Friday of June of the school year in which their 16th birthday occurs.
Northern Ireland: after the 30th June of the school year in which their 16th birthday occurs.
Scotland: 16th birthday falls between 1st March and 30th September - after 30th May of that year, otherwise after the start of the Christmas holidays in that school year.
Piece rate workers
From 1st October 2004 employers have had to pay employees on piece rate work the same as the national minimum wage. From April 2005 this rate was increased to 120% of the national minimum wage. In reality this means that most piece workers will instead be paid the national minimum wage hourly wage.
What entitlements do workers have
All employers must keep records (for up to seven years) to prove compliance with the legislation. All workers are allowed to see the records relating to their own employment. If access is denied, or the records do not exist, they can complain to an employment tribunal, likewise, if they have not been paid the NMW they can complain either to HMRC or a tribunal.
What happens when a complaint is made
A worst case scenario is that the employer could be fined up to £5000 for committing a criminal offence, an enforcement notice with minimum fines of £200.00 per worker and a civil fine of twice the amount of the national minimum wage per day per worker during the period of non-compliance. Enforcement notices can also be issued for breaches made on employees that have left and prior to the enactment date of the amended regulations that allow this.
Enforcement is carried out by HMRC. On a visit by an officer, which may or may not be by appointment, you will be expected to show records that prove your compliance. As with everything, failure on one count leads to suspicions on others, and with today's HMRC covering a multitude departments it is very easy for that information to be distributed.
Correcting errors and the calculation
If, by mistake, you discover that NMW has not been paid then, after discussion and agreement with your workers, the amount of underpayment can be made and the payment rate adjusted to comply for future payments. Even though the rate now complies you have still technically committed an offence under the NMW legislation. Ignorance of the law or miscalculation of the rate is no excuse.
Things that may trip you up when calculating NMW
Not all payments may be used for the calculation of NMW. In addition to basic pay, bonuses, commissions, performance incentives etc are allowed but things like overtime, benefits, expenses and special shift allowances are not. Also taken into account is the charge for accommodation when it is part of the job. From 1st October 2009 the inclusion of service charges, gratuities, tips and cover charges will be no longer be in the calculation of of the national minimum wage.
Obviously, the closer the basic pay rates are to the NMW the greater the need for close monitoring to ensure compliance. Generally, the higher the basic pay rates the less chance there is of contravention. Special attention needs to paid to salaries that are made up of irregular payments, i.e. varying or high but infrequent commissions, piece work payments or 'rate for job' payments.
What counts a hours
If payment is not dependant on the number of hours worked or a salary agreement, for example, sales commission, piece work or payment per task, it is good practice that an agreement be made that states a 'fair estimate' or the 'average' hours worked to attain a certain level of pay or complete a number of tasks etc.
Calculation is then a simple matter of dividing the amount of qualifying pay by the number of qualifying hours. If the result is greater or equal to the category the employee falls in then compliance is achieved.
Record keeping
A complete set of records must always be kept no matter the level of pay, however, it will always be a good idea to keep a special set of records or documents where there may be some difficulty or it would not be straight forward proving compliance. These may include statements or agreements that explain exactly how the NMW is met under set conditions or circumstances, i.e. expected hours worked, number of items per hour, varying piece rates, commission rates etc.
