motivation in practice - national minimum wage

Many businesses in the UK, including large numbers of small businesses, are affected by the national minimum wage. It is worth understanding how this works since it may be relevant in a business studies case study exam.

Who the Minimum Wage Applies To

The national minimum wage in the UK is currently £4.20 for workers aged over 21 and £3.60 for 18 to 21 year olds.

These rates will rise to £4.50 and £3.80 respectively from October 2003; with a further proposed rise to £4.85 and £4.10 from October 2004. There is also a minimum training wage for new employees over 21 of £3.60 an hour, but this wage applies only to workers doing accredited training and for a maximum of 6 months. A worker's hourly rate of pay may include such payments as bonuses and performance-related pay.

There is no national minimum wage for workers aged under 18. Other exemptions from the minimum wage are the self-employed, volunteers, apprentices, members of the armed services, and people working as part of a family.

What Employers Have to Do

Employers have to keep records that show that they are paying the national minimum wage, although it is up to an employer what form these records take.

Employees have a right to see their pay records and legal rights to the national minimum wage.

The Inland Revenue enforces the legislation, and employers can be taken to an employment tribunal or to court if they fail to pay the minimum wage. There are financial penalties for failure to comply with national minimum wage legislation.

Employers found not to be paying at least the minimum wage may be served an enforcement notice ordering them to make minimum wage payments and refund any underpayment. If this notice is ignored employers may face a penalty notice and a fine of £7.40 per worker for each day they do not comply.