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Changes to National Minimum Wage Regulations

Friday, 4 April 2014

Two important amendments to the national minimum wage regulations came into force on 7 March 2014.

The changes were brought in by two statutory instruments, The National Minimum Wage (Amendment) Regulations 2014 and The National Minimum Wage (Variation of Financial Penalty) Regulations 2014.

The first made changes to the exemptions from the national minimum wage in order to try and help with the problem of youth unemployment while the second increased the penalties for underpayment.

Employers should be particularly cautious regarding the latter.

The National Minimum Wage (Amendment) Regulations 2014

This amendment has been brought in to encourage the use of traineeships. Regulation 12 of the National Minimum Wage Regulations 1999(1) has been amended so that workers will not qualify for the national minimum wage if the traineeship consists of a skills programme which meets the following conditions—

(a) the programme includes a work experience placement and work preparation training;

(b) the programme lasts no more than six months;

(c) the programme is funded in whole or in part by the Secretary of State under section 14 of the Education Act 2002(2) or by the Chief Executive of Skills Funding(3); and

(d) the programme is open only to persons aged on the first day of the traineeship—

(i) at least 16 years but under the age of 25 years; or

(ii) at least 16 years but under the age of 26 years in the case of persons subject to learning difficulty assessment within the meaning of section 13(4) and (5) of the Education Act 1996

The National Minimum Wage (Variation of Financial Penalty) Regulations 2014

This amendment to Section 19A of the National Minimum Wage Act 1998 has increased the financial penalty provided for within notices of underpayment. The financial penalty is served by a national minimum wage enforcement officer on the employer and it is calculated as a percentage of the total underpayment.

This percentage has increased from 50% to 100% of the underpayment. In addition, the amendment has increased the maximum financial penalty from £5,000 to £20,000.

Complying with National Minimum Wage Requirements

In light of the increased penalties it is even more important that employers are aware of their obligations regarding the national minimum wage. Advice should be sought regarding any proposed roles that employers expect to qualify for an exemption under the regulations. Current rates are:

Aged 21 and above: £6.31

Aged 18 to 20 inclusive: £5.03

Aged under 18 (but above compulsory school leaving age): £3.72

Apprentices aged under 19: £2.68

Apprentices aged 19 and over, but in the first year of their apprenticeship: £2.68

For specialist employment advice please contact Aneil Balgobin via e-mail or by telephone on 0207 611 4848.

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