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National Minimum Wage Act: Summary

All workers in the UK are entitled to be paid at least the national minimum wage (Section 1)

The Secretary of State will set the rate of the minimum wage by Regulation (Sections 2, 5)

It will be expressed as an hourly rate (Section 1)

The minimum wage will apply to:

• all workers over school leaving age (Section 1, 54)
• overseas workers even if they are only in the UK for a short time (Section 1)
• agency workers and homeworkers who may not otherwise qualify as ‘workers’ in employment legislation (Section 34, 35)
• Crown employees (Section 36)
• staff of the House of Commons and House of Lords (Section 38, 39)
• mariners (Section 40)
• agricultural workers already covered by the agricultural minimum wage (Section 46, 47 and Schedule 2)

It will not apply to:

• the genuinely self-employed, office holders, directors (unless they have an employment contract) (Section 54 - definition of worker)
• school children below school leaving age (Section 1)
• the armed forces (Section 37 - amended in Committee)
• share fishermen (Section 43)
• voluntary workers (Section 44)
• prisoners working under prison rules (Section 45)
• A worker cannot collude with his employer to be paid below the minimum wage (Section 49)

The Secretary of State will determine what elements of pay (such as bonuses, benefits in kind, tips etc) are to count towards the national minimum wage, and may set reference periods over which the calculation is to be made. This will be done by Regulation. (Section 2, 5)

The Secretary of State has the power to make a number of other Regulations. The majority of these are subject to affirmative resolution (Section 51). These include powers to:

• exclude or set a different rate for young people between 16 and 25 or for any ages within that range (Section 3)
• add new categories, eg. trainees regardless of age, to those treated separately under clause 3 (Section 4)determine what minimum wage records employers must keep (Section 9)
• give all workers the right to a written pay statement so that they can see if they are receiving at least the minimum wage (Section 12)
• extend the coverage of the Bill to those who are not presently defined as ‘workers’ (Section 41)
• apply the NMW to offshore workers (Section 42)

the draft Regulations use some of the above powers

the Secretary of State can refer matters to the Low Pay Commission at any time, for instance if he wants recommendations on changing the rate (Section 6)

the Secretary of State may appoint officers to enforce the minimum wage. The Act sets out the powers of these officers, which include the power to serve a notice and fine employers who do not comply (Section 13, 14, 19, 21)

Any worker, including agency and home workers without contracts, will have the right to recover underpayments through industrial tribunals or civil courts (Section 17, 18)

ACAS will have a conciliation role in tribunal cases (Section 30)

When a worker makes a minimum wage claim in a tribunal or civil court, the burden of proof is reversed. It will be for his employer to establish either that the minimum wage has been paid, or that the individual is not in fact a worker and so does not qualify for it (Section 28).

It will be a criminal offence to refuse or wilfully neglect to pay the minimum wage. There are four further criminal offences relating to record keeping and obstruction of an investigation (Section 31).