Legal advice: National minimum wage increase

How will your business be affected by the October minimum wage increases? Here are your options.

By Martin Donoghue of thePublican.com's team of legal experts from London solicitors Joelson Wilson.​

Autumn will soon be upon us with all it brings: the early morning chill, shortening days, brisk walks through woods carpeted with fallen leaves, and of course any rise in the national minimum wage that the government sees fit to introduce!

This year there will be three changes introduced from October. The rate for workers aged 22 or over will increase from £4.85 an hour to £5.05 an hour; the rate for workers aged 18 to 21 inclusive will rise from £4.10 an hour to £4.25 and hour; and the amount for the provision of accommodation that can count towards the minimum wage will increase from £3.75 a day to £3.90 a day.

The fact that part of the cost of providing accommodation can count towards the minimum wage figure is often overlooked, which is surprising as it can represent over 10 per cent of the minimum wage for a worker aged 22 or over and working seven hours a day.

In fact, there appears to be a general lack of knowledge on which payments count towards calculating the minimum wage and which payments do not count towards calculating the minimum wage, which is quite concerning as failure to pay the minimum rate is an offence carrying a fine of up to £5,000. So the following lists of some of the payments that currently count and do not count in calculating the national minimum wage may be of interest.

Payments that count include incentive or merit payments, bonuses, and tips paid through the payroll (although tips paid directly to a worker by a customer and kept by the worker, or tips gathered up and paid to an independent Troncmaster for payment do not count).

Payments that do not count include loans, an advance of wages, overtime in so far as the payment exceeds the normal rate of pay, allowances for special duties such as an unsocial hours payment (unless consolidated into the worker's standard rate of pay) and the value of non-cash benefits, e.g. the provision of meals, although as stated above an employer can include £3.90 a day for accommodation.

So it is definitely worth checking exactly what goes to making up pay. There may be a few pleasant or nasty surprises.