On paper, the very structured approach to the national minimum wage and the national living wage appears fairly straightforward. Unfortunately, when it comes to laws and regulations there are always complications and exceptions to the rule.

Unfortunately, in an attempt to assist employees, the UK government have somewhat confused the situation regarding the national living wage and the recommended living wage. These are two very different issues are not connected in any way shape or form.

The national living wage is part of the legal national minimum wage structure in the UK, available to those aged 25 and over. The living wage is a recommendation by the “Living Wage Foundation” which is an independent campaign group. You may see some employers paying the living wage, which is higher than the government’s national living wage, but this is voluntary and not law. Complicated?

What is the national minimum wage/national living wage?

The majority of workers and employees in the UK are entitled to a minimum of the national minimum wage. If you are 25 years of age or over, and were eligible for the national minimum wage, you should be entitled to the national living wage. Further along in this article we will detail the current levels of the national minimum wage.

This has been something of a controversial subject in years gone by. Immediately, many businesses saw a significant increase in their cost base and had to rearrange their wage structures. On the whole, there are numerous reports suggesting that the national minimum wage and national living wage have assisted economic output and consumer spending.

At this point it is important to note that your employer is not able to dismiss you or change your job description/title in order to avoid paying you the minimum wage. If they were to do so, on paper, you would have a strong case for taking legal action.

Are you entitled to the national minimum wage or national living wage?

Even though the system covers the majority of employees and workers in the UK, you may not be eligible for the minimum wage if you are:-

• Self-employed
• Under 16
• Working as an au pair/nanny
• A member of the Armed Forces
• A volunteer
• Doing work experience
• A prisoner
• A trainee/intern
• A farmworker

In some areas the rules are a little more complicated and those who are self-employed, trainees/interns and some farmworkers, may, in some circumstances, be eligible for the minimum wage. As a consequence, it is important to take advice for your specific situation.

An employer who previously deemed you in ineligible for the minimum wage may review their decision if you can present supporting evidence. Rules are often complicated for everybody!

The minimum wage structure

The following table details your current entitlement under the minimum wage structure. The specific hourly rates for each group are regularly increased in line with various economic indicators. For example, in April 2016 the hourly rate for those aged 25 and over was just £7.20, compared to £8.72 in 2020.

Age-group	Name of wage	Hourly rate (before tax)
Age 25 and over	National Living Wage	£8.72
Age 21 to 24	National Minimum Wage	£8.20
Age 18 to 20	National Minimum Wage	£6.45
Age 16 to 17	National Minimum Wage	£4.55
Apprentices aged 16 to 18, first year apprentices aged 19 and above	National Minimum Wage	£4.15

This all seems fairly straightforward on paper, although as you might expect, there can be complications. If you fall into any of the following categories it would be sensible to take advice and clarify your position:-

• You do not receive payment for business travel time
• You do not receive payment for time spent on training courses
• You are not paid for the full duration of your “on-call” shifts
• Accommodation costs are deducted from your wages

Due to the complicated nature of UK employment regulations, loopholes can emerge on a regular basis. In what is often a game of cat and mouse, the UK government will eventually respond to these potential loopholes.

Clarifying your position with your employer

If you believe you are eligible for the minimum wage, but your employer has been paying a lower rate, you need to broach the subject as soon as possible. Assuming you are correct, your employer is legally obliged to make up previous shortfalls in your hourly rate.

The subject of pay and wages is never an easy one to bring up with your employer. As a consequence, it is advisable to take a subtle informal approach in the early stages. It may be that you have been impacted by the various complications, or your employer has simply got it wrong. When approaching your employer, you should be armed with as much supporting information as possible.

Rectifying a genuine mistake

Faced with evidence supporting your eligibility to the minimum wage, most employers would admit their error. In this scenario, payment shortfalls going back to the time you became eligible should be paid immediately.

Additional benefits

On occasion, some employers may argue that additional benefits such as free meals should be counted towards your wages. Strictly speaking, this stance does have merit. However, you should still be paid the minimum wage for your age group/circumstances before any additional benefits are taken into account.

When informal talks fail

Unfortunately, whether due to a misunderstanding or simple reluctance to pay you the correct hourly rate, informal talks can fail. At this stage, there are a number of steps you can take to secure your full entitlement.

Confirm your position

Before moving onto the next stage, you should double-check your position, take advice from appropriate parties and gather more supporting evidence. The Internet is a very useful starting point, after which you can approach bodies such as the Citizens Advice Bureau to further clarify your position.

Raising an official grievance

Progressing from a relatively informal approach to your concerns, to the lodging of an official grievance, is a big step. Unfortunately, if your employer is unwilling to change their stance then you may have no option. Present your evidence in a simple matter of fact way and ask your employer for a formal reply.

From this stage onwards it is important to maintain a paper trail of your communications with your employer. The simplest way to do this is to communicate via email.

Conciliation services

If the raising of an official grievance does not persuade your employer to right the obvious wrongs, the next option is the use of conciliation services which will attempt to bring parties together, discuss evidence and try to resolve disputes before moving to a tribunal/legal action.

Employment tribunal

The next stage is an employment tribunal with an early attempt at reconciliation counting in your favour. Employment tribunals can be stressful and expensive, and this option is time-barred. You must begin a tribunal claim within three months less one day from your most recent underpayment.

Legal action

Thankfully very few employee/employer disputes will make it to the courts, but if an employment tribunal is unable to make any headway, this is your next option.

While the previous options at attempting reconciliation are time-barred, this may not be the case for court action. However, you would need to confirm the specifics of your individual circumstances.

Reporting your employer to HMRC

It is illegal to pay less than the minimum wage to those who are eligible. In recent years we have seen many investigations by HMRC where employers failing to meet the minimum wage standards have been named and shamed. While each complaint will be considered on its merits, a group complaint from those working for one employer is more likely to be acted upon.

Due to the huge workload brought about by the minimum wage act, it may take some time for HMRC to investigate even the most obvious infringements. Therefore, if you are hoping a call to HMRC will quickly resolve your situation, releasing back payments, this is unfortunately highly unlikely.

Many people are put off reporting their employer to HMRC because of the potential consequences. However, it is illegal to be dismissed for reporting your employer for workplace infringements. You can also request that your name is not disclosed when HMRC contact your employer to investigate further.

Summary

If you believe you are being underpaid, it is important that you contact your employer as soon as possible. Very often, an informal discussion will alert your employer to issues they may have inadvertently overlooked.

Thankfully, the large majority of eligible claims are settled relatively quickly and very few will make it through the whole process, from an informal discussion to legal action. However, it is important that you protect your payment rights and ensure that your legal entitlement to the minimum wage is honoured.