Government consults on draft regulations for National Minimum Wage

In September 1998, the Government launched a consultation process on the draft regulations governing the new National Minimum Wage, which will come into force in April 1999.

The introduction of the UK's first statutory National Minimum Wage (NMW) came one step closer on 11 September 1998, when the Department of Trade and Industry launched a public consultation on draft regulations implementing the NMW. The NMW was one of the key commitments of the Labour Government when it came to power in May 1997 (UK9704125F), and the new proposals by and large put into effect the proposals of the Low Pay Commission (LPC) set up to recommend the level of the NMW, which published its report in June 1998 (UK9807135F). The draft regulations would:

  • set the initial hourly rate of the minimum wage at GBP 3.60;
  • set modified rates for 18-21 year-olds (GBP 3) and workers receiving accredited training in the first six months of a new job with a new employer (GBP 3.20);
  • exempt all workers under 18 and apprentices under 26 in the first year of their apprenticeship;
  • set the pay reference period for averaging the NMW at a maximum of one month;
  • determine how to calculate the hours worked for which the NMW is payable;
  • determine what is and is not included as pay for the purposes of the NMW;
  • require employers to issue a statement of the NMW to workers and to keep records; and
  • come into force on 1 April 1999, subject to parliamentary approval.

The document also covers the enforcement of the NMW, with employers which do not comply with the regulations being fined GBP 7.20 per day for each employee not being paid the NMW. If employers continue to defy the regulations, they can face prosecution and fines of up to GBP 5,000 for each offence. The newly-merged Inland Revenue and Contributions Agency will be responsible for enforcing the NMW. Inspectors from the new agency will be able to investigate complaints from employees and have the ability to make spot checks on companies.

The regulations would also require employers to keep detailed pay records for all their workers who earn less than GBP 12,000 per year. The records must be kept in a single document for each worker and must be retained for at least three years. Employees will be entitled to access to this information within 14 days of making a request, if they have reasonable grounds for believing they are not being paid at the NMW rate. The consultation document also gives details of how the NMW should be calculated in the case of piecework.

Ian McCartney, the trade and industry minister, said that: "Our approach aims to balance the protection of workers against the need to avoid overburdening business ... We will ensure that enforcement is fair to worker and employer alike and is delivered in a way that minimises burdens on business and provides maximum value for the taxpayers' money."

The government intends to consult over 2,000 individuals and organisations and wants responses to the consultative document by 8 November 1998, after which the regulations will be laid before parliament for approval.

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