What is the minimum wage? UK companies fined £7m for breaches

What is the minimum wage? UK companies fined £7m for breaches

More than 200 companies, including WH Smith, Argos, and Marks & Spencer, failed to pay workers the minimum wage, the BBC reported.

The companies face fines of nearly £7 million and will have to reimburse affected workers. However, the named companies said the breaches were unintentional and had been rectified quickly.

M&S, for example, said an error occured when temporary staff were not paid within the time frame set out by minimum wage regulations. WH Smith, on the other hand, said it misinterpreted rules around reimbursing staff for uniforms.

Kevin Hollinrake, minister for enterprise, markets and small business, said: “Paying the legal minimum wage is non-negotiable and all businesses, whatever their size, should know better than to short-change hard-working staff.”

What is the minimum wage?

The minimum wage — the full title of which is the National Minimum Wage (NWM) — is the legal lowest amount that UK employers must pay their workers per hour of work. It is a statutory requirement set by the Government to ensure that workers receive a fair and reasonable level of pay.

The minimum wage aims to protect workers from exploitation and ensure that they receive an income that meets basic living standards.

The minimum wage rates in the UK are typically differentiated based on factors such as the worker’s age and whether they are an apprentice. These rates are periodically reviewed and adjusted by the Government to reflect changes in living costs and other economic considerations.

People classed as ‘workers’ must be at least school-leaving age to receive the minimum wage. It is different from the National Living Wage (NLW), a higher rate of minimum wage for workers aged 23 and over. It was introduced by the Government in April 2016 to ensure that workers of such ages receive a higher minimum wage to reflect the higher cost of living associated with adulthood.

How much is the minimum wage in 2023?

The Government increased the minimum wage and NLW amounts on April 1, 2023. The increases and current rates are as follows:

  • NLW (23+) has increased by 9.7 per cent, from £9.50 to £10.42.

  • Minimum wage (21-22) has increased by 10.9 per cent, from £9.18 to £10.18.

  • Minimum wage (18-20) has increased by 9.7 per cent, from £6.83 to £7.49.

  • Minimum wage (under 18) has increased by 9.7 per cent, from £4.81 to £5.28.

  • Apprentice rate has increased by 9.7 per cent from £4.81 to £5.28.

  • The Accommodation Offset (which comes into effect when a worker lives in accommodation provided by their employer, who charges them for this, also increased by 4.6 per cent from £8.70 to £9.10.

What is the London living wage and how much is it?

The London living wage (LLW) is a voluntary hourly wage rate that is calculated independently by the Living Wage Foundation. It is designed to reflect the higher cost of living in London compared with other parts of the UK. The LLW is not a statutory requirement, but many employers in London choose to pay their workers this higher rate as a commitment to fair pay.

The Living Wage Foundation calculates the LLW based on the actual cost of living in London, taking into account factors such as housing, transport, and other basic expenses. The LLW is intended to provide workers with a wage that allows them to cover their essential needs and maintain a decent standard of living in the capital city.

It’s important to note that the LLW is separate from the NLW and the minimum wage. The exact amount of the LLW can vary and is updated annually.

As of September 2022, the amount was set at £11.95.

You can check future amounts on this website.

Why did the Government increase the national living wage?

Chancellor Jeremy Hunt announced in his Autumn Statement in November 2022 that the NLW would increase in 2023.

The increase was encouraged by the Low Pay Commission, the independent body which advises the Government on the payment.

Their recommendations ensure the NLW continues on track to reach the Government’s target of two-thirds of median earnings by 2024.

Regular pay rose by 5.7 per cent in 2021, the fastest growth since 2000 excluding the pandemic, when some people secured big wage rises when returning to work from furlough.

However, the UK unemployment rate also rose slightly to 3.6 per cent in the three months to September 2022, up from 3.5 per cent in August, the Office for National Statistics (ONS) said. The figures at the time showed unemployment at 3.7 per cent, and an increase in the amount of long-term unemployed people.