Money guru Martin Lewis is warning workers that they could be being underpaid as after changes to the National Minimum wage came into force in April. This month saw a rise in the National Minimum wage with all workers aged 22 and over being entitled to £10.42 per hour. Meanwhile, young workers aged 16 to 17 saw their wage rise from £4.81 to £5.28.
The increase, which was announced by Chancellor Jeremy Hunt last November, affects around 2.5 million people and is an increase of around 10% compared to last year. However, the founder of Money Saving Expert has warned that many employers have not caught up to the new rates and are underpaying their workers.
Speaking on The Martin Lewis Money Show on ITV Mr Lewis said: "It’s important to understand this isn’t just for people who are paid hourly. This applies even if you are on a salary. For example, if you work 35 hours a week and you’re aged 23 then you should earn a minimum of £19,964 a year. Those are the rates, but people can still be underpaid." To get all the latest money-saving news straight to your inbox twice a week sign up here.
Read more: National Minimum Wage: How much extra you will get when wages increase on April 1
As well as the minium wage, there is the so-called National Living Wage which is the government’s set minimum rate that employers must pay staff aged 23 and over for each hour worked. Essentially, if you’re over 23, you are legally entitled to the National Living wage. If you’re under 23, you are only entitled to the National Minimum Wage, which varies based on your age.
The Living Wage is calculated by the organisation Living Wage Foundation, which sets its sum based directly on the actual cost of living – things like paying for transport, rent, energy bills, etc. It is voluntary, meaning employers can choose to sign up to the Real Living Wage pledge if they want to, but they don't have to.
The complete list of minimum wage increases from April 1 is as follows:
- National Living Wage: £10.42 up from £9.50 (9.7% rise)
- 21-22-year-old rate: £10.18 up from £9.18 (10.9% rise)
- 18-20-year-old rate: £7.49 up from £6.83 (9.7% rise)
- 16-17-year-old rate: £5.28 up from £4.81 (9.8% rise)
- Apprentice Rate: £5.28 up from £4.81 (9.8% rise)
- Accommodation Offset: £9.10 up from £8.70 (4.6% rise)
Explaining the changes, Mr Lewis explained that there were a variety of factors workers need to keep an eye out for to see if they are being underpaid.
Accomodation
He explained that employers can reduce your pay if they provide accomodation, but only by a certain amount. He said: "For anyone who gets accommodation as part of their job, they are allowed to reduce what you get below the minimum wage, but only by a maximum of £63.70 a week. And that includes any accommodation costs for gas, electricity, furniture and laundry that you get as part of your accommodation."
Customer tips
Unlike in some countries, Mr lewis stressed that any tips given by customers must be given on top of minium wage. He said: "For those who get tips or overtime, it has to be on top of the minimum wage that does not count towards the minimum wage. Your basic standard minimum wage must be part of that. And if you have a higher overtime rate and they try and use that as a justification, why they can give you a lower standard rate, it doesn’t work. The standard rate you get should be at minimum wage next one."
Commission
For those working jobs that include commissions, Mr Lewis pointed out that for workers on a commission only contract employers needs to top that up. "If you’re on commission only, and you’re not getting the minimum wage, employers have to top it up. If you do not have set hours, they need to work it out via a fair estimate of how long it would take you to do the job getting towards the end the apprentice rate," he said.
Apprentice rates
Mr Lewis stressed that to receive apprentice rates, you must be a 'real apprentice'. He explained: "You need to be a real apprentice, and that means you should have structured training as part of what you do.
"If not, you’re not an apprentice. You should be on the rate for your age, and you may be being underpaid if you’re not."
Uniforms
The money expert stressed that if workers are having to pay for their own uniform "you are being underpaid, and they are not allowed to do that."
"So let’s take a look on that the first one in the biggest category. If, as part of your employment, you have to pay for your uniform or tools or safety clothing or appropriate clothing and the cost of those once it is taken off, your wage puts you less than the minimum wage. You are being underpaid, and they are not allowed to do that."
Working hours
Mr Lewis said: "You must be paid for all of your working time, including overtime training, travel time, not commuting, waiting time, opening up time. So let’s say you’re doing a security check and you’re not paid for that. At the start of your shift, you don’t get paid.
"You only get paid once your hours start. If you were to factor that those hours in and that was to take you below minimum wage, which it would for anyone who’s only at the bottom end of minimum wage, then you are being underpaid."
He said: "The next thing to notice is your minimum wage should rise each April on the first full pay cycle, which means the first amount of pay that comes after April. So if you started being paid second of April to second of May, then you would get the money for that, and your pay should go up when you turn 18, 21, 23 because there are different rates, an important one."
The size of the company
Mr Lewis warned that bigger companies had also been found to be "trying to play fast and loose" in the past rather than just smaller firms, and asked people to check even if they were working for a large employer. "So don’t assume if you’re on minimum page working for a big firm that you’re being paid the right amount. Go through this checklist," he said.
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