The National Minimum Wage (NMW) is the minimum pay per hour almost all workers are entitled to. The National Living Wage (NLW) is higher than the NMW – workers get it if they are over 23. It does not matter how small an employer is, they still have to pay the correct minimum wage.
The minimum wage a worker receives depends on their age and there is a different rate if they are an apprentice. A wide range of workers are entitled to the NMW including those who are part time, apprentices and agency workers. Some workers are not entitled to the NMW including those who are self-employed and company directors.
Employers must pay workers the correct minimum wage. Importantly, they must also retain records because if an employee does not think that they are being paid the correct amount, they are entitled to see their records and make copies of them. The retention of the records is part of the enforcement regime to ensure that employers pay the correct amount.
The records must be sufficient to show for each worker that minimum wage is being paid for every pay reference period they work. The records will be used in the event of a dispute and it is a criminal offence to fail to keep sufficient records.
Employers must be aware of an important change that was introduced on 1 April 2021. From this date, employers are required to keep records for a minimum of 6 years after the end of the pay reference period following the one that the records cover. This applies to all records created after 1 April 2021 and also to all records which an employer was still required to keep immediately prior to 1 April 2021 under the previous requirement that records be kept for a minimum of 3 years. For pay reference periods ending before 1 April 2018, employers are required to keep records for no less than 3 years for pay reference periods ending before 1 April 2018.
A civil case can be brought before a court for up to 6 years. In such a case, it would still be for the employer to prove that they had paid the minimum wage. Thus, employers may wish to consider retaining records for 6 years also for those earlier periods, even though the requirement under NMW legislation to retain records for 6 years takes effect from 1 April 2021.
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