Definition
The minimum wage is the lowest rate of remuneration that an employer may legally pay. It acts as a safety net to prevent the exploitation of workers, ensuring that they receive a fair day’s pay for a fair day’s work. In the UK, the minimum wage levels change based on age and job role, with specific rates set for different age groups and apprentices.
Example: As of April 2017, the rates for the National Living Wage in the UK are:
- £7.50 per hour for those aged 25 or over
- £7.05 per hour for those aged 21 to 24
- £5.60 per hour for those aged 18 to 20
- £4.05 per hour for those under 18 years old
- Special rules apply to apprentices.
Examples
Example 1:
A retail worker aged 26 works 20 hours a week. They are entitled to at least £7.50 per hour, making their weekly earnings a minimum of £150.00.
Example 2:
An 18-year-old part-time receptionist working 15 hours a week will receive at least £4.05 per hour, totaling £60.75 per week.
Frequently Asked Questions (FAQs)
Q1: What is the difference between the National Minimum Wage and the National Living Wage in the UK?
A1: The National Minimum Wage applies to workers under 25 and includes various wage bands for different age ranges. The National Living Wage is a higher wage rate applicable to workers aged 25 and over.
Q2: Are apprentices entitled to the statutory minimum wage?
A2: Yes, but special rates apply. Apprentices under 19 or in their first year of apprenticeship are entitled to a lower wage, which is updated periodically.
Q3: How is the minimum wage enforced?
A3: In the UK, the National Minimum Wage is enforced by Her Majesty’s Revenue and Customs (HMRC). Employers found violating the minimum wage laws may face penalties, back payments to workers, and public naming and shaming.
Q4: Can employees negotiate a higher wage than the minimum?
A4: Yes, employees are free to negotiate wages above the statutory minimum. Many employers offer higher wages to attract skilled labor.
Q5: What should an employee do if they are paid less than the minimum wage?
A5: Employees should first discuss the issue with their employer. If unresolved, they can file a complaint with HMRC or seek advice from advisory services like ACAS.
Related Terms with Definitions
Living Wage
A wage sufficient to provide the basic necessities to maintain a safe, decent standard of living within the community. It is often higher than the legal minimum wage.
Wage Gap
The difference in wages between various groups of people, such as gender wage gap, indicating disparities in income levels.
Fair Labor Standards Act (FLSA)
A US law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in private and public sectors.
Pay Equity
The principle of maintaining fair pay practices in which wages are determined without discrimination on the basis of gender, race, or other characteristics.
Apprenticeship Levy
A UK government initiative requiring employers with a pay bill over £3 million per year to contribute to fund apprenticeships, aimed at enhancing skill development.
Online References
Suggested Books for Further Studies
- Fair Pay: How to Get a Raise, Close the Wage Gap, and Build Stronger Organizations by David Buckmaster
- The Minimum Wage Revisited in the Enlarged EU by Daniel Vaughan-Whitehead
- Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream by Andy Stern and Lee Kravitz
Accounting Basics: “Minimum Wage” Fundamentals Quiz
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