The Minimum Wage, Overtime, Equal Pay and Unpaid Work Experience


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The Minimum Wage

For 2014 we have updated our advice about the Minimum Wage.

Anyone who is defined as a ‘Worker’ – click here (including Employees and Agency Workers) is entitled to the minimum wage (NMW) – you do not need a written contract to be eligible.

If you are an Intern or considering an Internship see our Interns article here.

If you a Care Worker please see our new article here about your entitlements to the National Minimum Wage.

There is a Government Helpline 0800 917 2368 and a website that offers more advice and information -  http://www.nmw.direct.gov.uk/index.html
See our 2011 update on how successful the National Minimum Wage has been! and our 2013 article on more NMW confusion!

The minimum wage is a legal right that covers almost all workers above compulsory school leaving age. There are different minimum wage rates for different age groups of workers as follows:

  • The main rate for workers aged 21 and over from 1 October 2013 £6.31 per hour.
  • The development rate for 18-20 year olds is £5.03 per hour from 1 October 2013.
  • Apprentices under 19, or aged 19 or over but in their first 12 months of apprenticeship must be paid a minimum of £2.68 per hour from 1st October 2013.  See our Guide to Apprenticeships here.  Apprentices aged 19 or over who have spent a year int heir apprenticeship must be paid at least the NMW rate applicable to their age.

The new rules about employing school leavers now that the Government have changed the law on how long young people are required to stay in education or training are here.

From 1st October 2013, the National Minimum Wage will also cover Agricultural Workers for the first time – before their pay was covered by the Agricultural Wages Board.  Agricultural Workers have slightly different rights to other workers, and more details are here.

In June 2008 the English High Court ruled that tips/gratuities/service charges (not paid through the employer’s payroll) cannot count towards the minimum wage and this will become law on 1st October 2009. To see a list of those excluded from the Minimum Wage click here – http://www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_175114

For details about the Living Wage see our Article here.

For details of your pay rights during your notice period go to this link.

For details about Equal Pay see our Equality article here.

The National Minimum wage must be paid for all the time when you are:

  • at work when required to be working (even if work is not possible because for example, machinery breaks down, materals have not arrived, work is not available)
  • when you are on standby or on call time at or near your place of work
  • travelling on business during normal working hours – you should be paid for all travel time in connection with your job (not to or from home to work) including travelling from one assignment to another (except if you are on a rest break).  This includes waiting to meet someone in connection with work and includes travelling for the purposes of doing ‘output’ or ‘unmeasured’ work (see below)
  • training (or travelling to training) during your normal working hours

For National Minimum Wage purposes there are 4 different types of work – time work, salaried hours work, output work and unmeasured work:

  • If you are employed on ‘time work’  (you are paid an hourly rate in relation to the time you work and your hours may vary) – you should receive the NMW for all the time when you are at work working; or at work and available for work; or required to be on standby or on-call at or near your place of work and are working; or awake and working during ‘sleeping time’ at work (which is time when you are allowed to sleep as arranged with your Employer, who provides suitable facilities for you to do so at or near your work place).  At the end of 2013, an important case Whittlestone v BJP Home Support Ltd confirmed that employees who are engaged on ‘time work’ who are required to ‘sleep over’ at a specified location as part of their work are entitled to be paid the NMW for all those hours, regardless of whether their sleep was interrupted by work or not – details are  in our new Guide here.
  • If you are employed on ‘salaried work’ (you are paid an annual salary for set hours – in equal installments – but your hours may vary) – you should receive the NMW for all the time when you are at work working; or at work and available for work; or required to be on standby or on-call at or near your place of work and are working; or awake and working during ‘sleeping time’ at work (which is time when you are allowed to sleep as arranged with your Employer, who provides suitable facilities for you to do so at or near your work place).
  • People who are paid on commission (who are paid entirely or partly on the basis of sales or deals made) or on output work/piecework (who are paid according to the amount they produce) must still be paid at least the national minimum wage.  These Workers do not have to paid the minimum wage for each hour worked, but they must be paid the minimum wage, on average, for the time worked in their pay ‘reference’ period.  This ‘reference’ period is the period of time a worker’s wage is actually calculated, e.g. on a weekly or monthly basis, but cannot be longer than one calendar month.  This includes time spent travelling on business and to other work premises (from home, if you are based at home).
  • If you are employed in ‘unmeasured work’ (work that is not covered by any of the other 3 categories above – time; salaries, commission/outwork), so work, carrying out contractual duties for a flat rate, e.g. a home carer who lives and works in a clients home before having a break.   Determining what hours you should receive the NMW is difficult unless you are employed on a ‘daily average hours agreement’, which is a written agreement that determines the average number of daily hours the worker is likely to spend on their duties – and for these hours the NMW should be paid.  Workers who have entered into a ‘daily hours agreement’ do not have to paid the minimum wage for each hour worked, but they must be paid the minimum wage, on average, for the time worked in their pay ‘reference’ period.  This ‘reference’ period is the period of time a worker’s wage is actually calculated, e.g. on a weekly or monthly basis, but cannot be longer than one calendar month.  Where a Worker has not entered into a ‘daily hours agreement’ but is employed in unmeasured work, their Employer must record the hours they work during the pay reference period and pay them for every hour worked.  This includes time spent travelling on business and to other work premises (from home, if you are based at home).
  • Agency workers and Homeworkers are expressly covered by the NMW.
  • Apprentices receive the NMW for all their time spent working and training – where they are employed on a Contract of Apprenticeship, on a publically funded apprenticeship or working under an Apprenticeship Agreement.
  • From 1st January 2011 an amendment to this law disallows Employers’ schemes that allow part of a workers pay to be replaced with expenses payments for travel which would mean this part of their pay was outside of the pay counted for national minimum wage purposes.

For information about what happens when your Employer declares ‘short-time’ working click here.

The National Minimum wage does not need to be paid for time when you are:

  • being paid less than your normal pay, e.g. if you get half pay while on sick leave
  • on any unpaid leave your Employer allows you to take
  • taking industrial action
  • on-call at home or at another location, but not at work and not working (unless you are actually working from home/the other location during this on-call time or are called out to attend work during this time).
  • travelling between work and home or work and home (even if you return home during the working day, between ‘appointments’)
  • traveling between home and work if you are going to a place that is not your normal place of employment (i.e. you do not get the NMW for any additional travelling time in these circumstances).
  • a Worker who lives in their Employers home and shares in the household chores and leisure activities may not be entitled to the NMW if they are living with and being treated as part of the family.

N.B. Please note that the law relating to whether the NMW needs to be paid during ‘sleeping’ time whilst on-call and not working is complex  and case law is changing constantly.  Therefore please do not rely on our advice for your individual circumstances; it is guidance only and cannot be taken as an authoritative interpretation of the law.  In 2012 an important case at the Employment Appeals Tribunal confirmed what previous case law had described – that during a sleeping night-shift, only the hours spent awake and working will count towards a workers National Minimum Wage – details are here.

The pay that should be taken into account when calculating your average hourly rate of pay is:

  • you total gross pay (basic salary, any bonus or commission or incentive payments).
  • certain ‘benefits in kind’ can be taken into account, this includes where your Employer provides you with accommodation.  The NMW may be ‘offset’ by some of your accommodations value.  From 1st October 2013 this is  £4.91 per day.  For more details about how this works please see the Direct Gov page here.
  • Salary sacrifice schemes (such as Childcare vouchers) are excluded from the calculation
  • Any premiums that are paid for overtime or shift work or on-call/sleep-in shifts do generally NOT count towards calculating your salary for the NMW and meals, fuel or car allowances/lease car costs do not count towards the NMW calculation.
  • Tips, service charges and gratuities do not count.
  • Repayment of expenses is not included in the calculation.
  • Expenses for travel to a temporary workplace are not included.

The Government run a Pay and Work Rights Helpline which can advise you about the NMW – on 0800 917 2368 – and you can report NMW abuses to them on this number.

Your Employer must keep records that show they have paid the NMW for 3 years, and you have the right to inspect these records if you have reasonable grounds to believe you have not been paid the NMW; you may complain to an Employment Tribunal if you are not allowed to see these records.

Workers also have a right not to be subjected to any detriment caused by an act of their Employer because the worker had taken action to enforce their statutory right to be paid the NMW.

The National Minimum Wage Regulations are enforced by the HMRC who have compliance and enforcement officers and can prosecute Employers for not abiding by the NMW.  From February 2014 the fines for Employers who do not pay their workers the national minimum wage increase from £5,000 up to £20,000.

Overtime:

  • There is no legal right to pay for working extra hours.
  • There is no legal right to extra pay for working extra hours.
  • However, if your contract guarantees paid overtime then you should be paid for this.  If your contract does not mention the exact rate to be paid then a ‘reasonable’ rate for the overtime should be paid.  If your contract does not mention a right to be paid for overtime then there is no such right to be paid, unless an oral promise has been made.
  • Your average pay must not be below the minimum wage (above).
  • Some Employers may offer you ‘time off in lieu’ instead of pay for overtime.
  • Overtime worked may or may not be taken into account when calculating holiday pay (see our Working Time Regulations Guide for more information) or paid maternity, paternity or adoption leave – it will depend whether overtime is specified in your contract of employment.
  • You only need to work overtime if your contact includes it and you should not work more than 48 hours per week (see Working Time Regulations Guide).
  • Your Employer cannot stop you working overtime if your contract guarantees it.
  • There are special rules for Sunday working – see our Workline guide and this Direct Gov page.

Equal Pay:

For details on Equal Pay please see our Guide to the Equality Act 2010 here.

 

Unpaid Work Experience/Interns:

The minimum wage legislation can make unpaid work experience/internships a grey area, as anyone defined as a ‘worker’ is entitled to a minimum wage.  Government guidelines say that if someone is taken on solely as a ‘volunteer’ for the reason of giving them skills/training, rather than in a normal employee-employer relationship, then this can be unpaid – as long as they have no set hours, are under no obligation to perform the work and can come and go freely.

  • For further details about Internships/work experience and whether they should be paid or not see our Interns article here.
  • Students doing work experience as part of a higher or further education course are not entitled to the minimum wage if the work experience they undertake is for under a years duration.
  • Skillset have published guidelines for work experience placements in the TV industry; more details of how the national minimum wage applies (and other useful information for employers and those on work experience placements) is contained in these guidelines at Annex A: http://www.skillset.org/uploads/pdf/asset_9268.pdf?1
  • ACAS, Skillset and PACT recommend that unpaid work experience should never be longer than for four weeks.

Workers under 18 -  For more useful information look at www.bbc.co.uk/radio1

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If you are an Employer and need ongoing professional help with any staff/freelance issues, or a Contractor/Freelancer/Employee with a complicated employment related problem, then talk to Lesley at The HR Kiosk  – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.

Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

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  • ajay51

    My granddaughter has been set up by the jobcentre for 7 weeks ‘work experience’ in a local shop.   She is unpaid.   However, after reading your article above, I have concerns as she does have fixed hours for five days a week.  Does this mean that she is entitled to be paid for her work?

    • Lesley Furber

      hi Ajay, did you read the Intern Article that is linked to above – it might partly depend on her age and whether this is part of her education/further education – and also what shop she is working in, there are different rules for charity shops/volunteering.  Let me know if you have any further queries on workline@freelanceadvisor.co.uk. Regards, Lesley, Workline

      • ajay51

        Hi Lesley
        Thanks for the response.   My granddaughter finished normal education followed by a course in Animal Care at College of West Anglia, which gained her a City & Guilds level 2 certificate in that subject.   She came to live with us following that because of the lack of jobs in her home area.   She did voluntary work experience for about six months at a riding school/livery stables, prior to undertaking NVQ level 2 in Horse Care and Management.   This alone qualifies her to work as a groom or stable hand etc.  But her wish is to work with animals in general, not specifically horses.  
        The jobcentre assistant said that she was unlikely to find any work in that sector and put her into work experience in Poundland to gain retail experience.  However, this ‘experience’ has so far been limited to restocking shelves and generally keeping them tidy.  She works regular hours 12 noon until 6pm Tuesday until Saturday and for this she only gets her jobseeker’s allowance, plus about half the bus fare to get into town to do the job.  
        I don’t really see this as useful work experience in the retail sector, nor is it doing anything to help her find work in her chosen field.

        • Lesley Furber

          Hi Ajay, I’m not familiar with the Job Seekers rules around ‘work experience’ but I guess if she is still receiving her allowance while doing this work (and it was arranged by the Job Centre) then this is legally allowed that she will not get paid by the Shop themselves.  It might be best for you to check on the Direct Gov website to see what it says about job seekers allowance/work experience schemes.  She needs to go back and talk to the Job Centre to see if there is anything more preferable she could do, although obviously I don’t know how successful that might be.  Good luck, Regards, Lesley, Workline

  • Hexyto

    If i am 19 years old, and i came to UK first year, what salary will i have per our ? 4.98? or 2.65?

    • Lesley Furber

      hi, unless you are on an official apprentice ship scheme then you should get a minimum of £4.98.  Regards, Lesley, Workline

  • Anita Lowe

    hi did u find any more info regarding my questions last week ???? thanks

    • lesleyfurber

      Hi Anita, I’ve spent some time on this but not yet found the answer. I will continue to look when I get the time. Regards, Lesley, Workline

      • Anita Lowe

        thanks so much

  • Anita Lowe

    hi once again …. my company are trying to send me on a day course ( unpaid ) on my day off …this has happened many times in the 4 yrs i have worked there – however i am disagreeing to go on any more courses until they agree to pay – am i in the right with this one please ???

    • lesleyfurber

      Hi Anita, sorry I still don’t have an answer to this – I’ve spent about 2 hours looking when I get the chance, but still can’t find an answer… I haven’t forgotten though and will look again when I get chance. Regards, Lesley, Workline

  • chris gray

    Can anyone tell me if the ‘sleep-in’ hours are added to the existing contract, or if they are considered to be included in an existing contract ? I am concerned that I will loose a substantial amount of money if my ‘sleep-in’ time is taken to be a part of my contracted hours.

    • lesleyfurber

      Hi Chris, thanks for your message. It depends on the Employer, it can be either, it depends how it is described. Regards, Lesley, Workline

      • chris gray

        Hi Lesley, many thanks for your reply. I will just have to hope the unions have their case worded appropriately.
        Kind regards Chris