Apprentices and National Minimum Wage

When taking on an apprentice, there are many considerations. This includes national minimum wage (NMW) considerations which employers often overlook. 

Emily Pearson explains

In HMRC’s latest “Name and shame” list for NMW defaulters, one of the main concerns cited was in respect of the payment of apprentices.  

Many people will be aware that there is an apprentice NMW rate, but are you aware of when this rate is applicable? 

Rate of pay

All apprentices, regardless of age, are entitled to receive the current NMW rate for apprentices, which is currently set at £5.28 per hour. This is not to say that you, as an employer, cannot pay a higher rate. 

Once your apprentice is aged 19 or over and has completed the first year of their apprenticeship, the correct rate of NMW is instead based on their age. This uplift should apply from the first pay period after the qualifying event, which is either their birthday or the first anniversary of the start of their apprenticeship. 

Working time

Another consideration for employers is ensuring that all staff are paid correctly for their working time. This is especially important where employees are receiving NMW. 

With regards to apprentices, their qualifying working time includes their normal working hours and any training that forms part of their apprenticeship. This will include their 20% off-the-job learning.

Additionally, if the apprentice is studying towards their English and Maths qualifications as part of their apprenticeship, these hours will also need to be included. 

If your apprentice is required to travel to a location for their studying which is not their usual workplace, any time spent travelling should also be paid at their usual rate along with travel expenses incurred. 

Deductions

Care needs to be taken when making any deductions from an employee’s wage; however, special care must be taken when an employee is receiving NMW. 

Some deductions will reduce an employee’s wage for NMW. Where an individual is receiving the minimum rate for their age, any deductions from this could inadvertently result in a breach of NMW. 

Examples of these deductions would include where an employee is required to purchase things for their job which are not reimbursed, such as tools.

Also, if you require your employee to wear specific items of clothing such as black trousers to work, these costs would be deducted from their pay. 

It is worth noting that the comments above apply to all employees and not just apprentices. 

Breaching the regulations

Being in breach of NMW Regulations can be costly. It can impact a business financially and their reputation.

This includes:

• Penalties for a NMW default of up to 200% of the underpayments. 
• Requirement to correct any historic underpayments at the current NMW rates. 
• Being included on HMRC’s published “name and shame” list. The latest list was published in June 2023 and it named over 200 businesses who had failed to pay workers NMW. 

National Minimum Wage can be a tricky area and it is easy to fall foul of the regulations unintentionally. With employees able to make reports to HMRC that they believe their pay is incorrect, it is vital to ensure ongoing compliance with the rules. 

Further information

If you would like to discuss this further or if you have any queries, please reach out to your usual contact here at Bishop Fleming or one of the People Advisory team.