It's the law: Minimum wage

Charities should have a regular wages audit to ensure employees receive at least the minimum wage.

The recent announcement by Alistair Darling, Secretary of State for Trade and Industry, of a crackdown on employers who fail to pay the national minimum wage should serve as a reminder to all employers to ensure that their staff are paid at least that requirement.

The national minimum wage for workers aged 22 is currently £5.35 per hour. Workers aged 18 to 21 must be paid at least £4.45 per hour and 16 and 17-year-olds should earn £3.30 per hour. This rate increases on an annual basis from 1 October and is effective from that date. Charities should therefore factor changes in the national minimum wage into annual pay reviews.

HM Revenue & Customs has enforcement powers over most employers, including charities. It can require employers to hand over detailed information so it can audit whether the national minimum wage requirements are being met (providing charities with yet another reason to ensure all payroll records are comprehensive and kept for a period of six years).

If HMRC believes an employer is not complying with the national minimum wage in respect of any of its employees, it will issue an enforcement notice seeking payment of arrears as well as a commitment to future compliance.

Penalties may also be imposed, calculated at twice the national hourly minimum wage for each day of non-compliance for each affected employee.

Affected workers may issue a complaint in an employment tribunal to recover arrears, or HMRC can issue proceedings in the High Court on behalf of affected workers.

When calculating whether any worker receives at least the national minimum wage, employers may offset the provision of living accommodation. Other benefits in kind, such as meal allowances, subsidised meals, medical insurance, pensions, fuel, car benefit and luncheon vouchers, cannot be taken into account when calculating the national minimum wage. Premiums that apply to overtime or allowances, such as London weighting, cannot be factored into the hourly rate either.

• Emma Burrows is a partner and head of the employment group at Trowers & Hamlins solicitors.

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