Pay & Wages – Minimum Levels

Updated 04/07/2022

Current statutory or similar rates are given. The rate for the previous year is given in brackets. The previous year usually refers to the tax year i.e. from 6th April unless noted otherwise.

Guarantee Pay ~

If there is insufficient work, an individual may be laid off or placed on shorter hours provided the individual’s terms contain a provision for laying of or being placed on shorter working hours. If not, the employer is required to pay the normal full rate of pay. If an employer has his own lay off or shorter hours scheme, it must not be less than the Guarantee Pay scheme.

Conditions for Guarantee Pay

If an individual’s terms permit being laid off but the employer does not pay the individual, a limited entitlement to be paid may arise under the provisions of Guarantee Pay if the following conditions are met:

  • Not paid by the employer and laid off for at least one day;
  • Willing to carry out alternative work even if not within his/her contract terms;
  • Is available for work;
  • Has been employed continuously for at least one month;
  • The reason for being laid off is not due to industrial action

If you’ are not being paid by the employer, you may be entitled to guarantee pay.

Guarantee Pay – Amount ~

Maximum = £30  (£30) per day
Limit of 5 days pay in any 3 month rolling period i.e. maximum of £150.

TIP – if an individual is laid off or put on short-time, he/she may apply for redundancy and claim redundancy pay if the change in working hours has lasted either 4 weeks in a row or for 6 weeks in a 13-week period.

Living Wage ~

The Living Wage is a voluntary agreement by an employer to pay a set minimum pay rate to all staff aged 18 or over. The rate is determined from the research and principles used by the Living Wage Foundation. It should be distinguished from the the National Minimum Wage which is the statutory minimum wage set by Parliament according to the age of an individual.  

The Living Wage rates from November 2021 are:

London   £11.05 per hour (£10.85) ;   Elsewhere  £9.90 per hour (£9.50).

Employers who agree to pay the Living Wage are expected to implement the current rate by 1st May of the following year.

National Minimum Wage ~

These are the statutory minimum hourly rates of pay according to the age of the person.

From 1st April 2022£ per hourFrom 1st April 2021£ per hour
23 years and over **£9.5023 years and over **£8.91
21 and 22 year olds£9.1821 and 22 year olds£8.36
18 to 20 year olds£6.8318 to 20 year olds£6.56
16 and 17 year olds£4.8116 and 17 year olds£4.62
** This rate is known as the National Living Wage but do not confuse it with the voluntary Living Wage – see earlier section.

TIP – the new rates above do not have to be paid until the start of the individual’s first full pay period that begins in April

Note changes to the above age groups were made from 1st April 2021 ‘aged 25 years and over’ was reduced to ’23 years and over’ and ‘aged 21 to 24′ was changed to ’21 and 22 years old’.

Apprentices ~

Under 19 =  £4.81  (£4.30) per hour.
Aged 19 or older in the first year of the apprenticeship = £4.15  (£3.90) per hour.

Other Apprentices, who have completed the first year of their apprenticeship, should be paid the statutory minimum hourly rate according to their age.

Living Accommodation – Offset ~

£8.70  (£8.36) per day maximum – the rules vary in some circumstances.

Sanctions for Underpayment of the National Minimum Wage ~

–  A 200% fine is payable of the amount underpaid unless that is paid within 14 days;
–  The minimum fine is £100 and the maximum £20,000.

The maximum may be imposed upon an employer for each worker who is underpaid.  A director of a company which fails to pay the National Minimum Wage may be banned for up to 15 years.

An organisation/trader may be named and shamed publicly by the Government

Exit Payments in the Public Sector ~

The cap of £95,000 on an exit payment made to an employee in the public sector is no longer applicable. An employee whose payment was affected adversely by the cap can request payment of the shortfall amount. That applies to payments made between 4th November 2020 and 12th February 2021 to which the cap was applied.

The sums deemed to be part of the cap do not include: payments in lieu of holiday; Tribunal or Court awards; compensation payments for accident, injuries or illness. Some public employers are exempt such as Universities and FE Colleges.

The Treasury is likely to introduce measures to challenge exit payments that fall outside parameters yet to be established.