As an employer, it is a legal requirement to ensure that employees aged 16 to 22 receive at least the National Minimum Wage, while those aged 25 and above must be paid the higher National Living Wage. The gross hourly rates for the current year (2023/2024) are as follows:
£5.28 for ages 16-17
£7.49 for ages 18-20
£10.18 for ages 21-24
£10.42 for ages 25 and above
To calculate your employee's hourly rate, you need to determine the gross pay and then divide it by the number of hours worked to find the gross hourly rate.
It's important to note that sometimes more than one rate may apply, but the focus is on the total hours worked and the total payment received, ensuring that the average hourly rate does not fall below the statutory minimum.
For overnight stays, only the waking hours count as working hours, and they are often rewarded with a lump sum overnight allowance instead of pay per waking hour. The average hourly rate for the specific week or month will be calculated by adding wages to overnight allowance payments.
If you provide accommodation for your employee, it is valued at a fixed amount of £60.90 per week. The total gross pay, including the accommodation value, divided by hours worked, must not be less than the NMW. Live-in employees may have long hours but generally work fewer hours in practice due to awarded extra time off. As long as the National Minimum Wage is achieved on average across the pay period, it complies with the regulations.
A family member exemption exists, wherein individuals living as part of a family do not need to be paid the minimum or living wage. This applies to those who share tasks, leisure activities, and meals on an equal basis with other family members, creating a relationship akin to a 'proxy-parent' or 'big sister' rather than an employer-employee relationship.
An important warning is that the legislation aims to ensure that everyone receives at least the minimum wage. Attempts to evade these regulations are frowned upon by tribunals, and employers are burdened with proving compliance. Keeping accurate records of actual working hours each week is advisable, even if you do not plan to alter the payment arrangement.
