What this month's national minimum wage rise means

XpertHR Small Business - a service run by Caterer and Hotelkeeper's sister website, XpertHR - examines this month's national minimum wage rise

The national minimum wage rose on 1 October. What did it go up to? The main rate, for workers aged 21 or over, went up to £6.08 an hour. The rate for workers aged at least 18 but under 21 rose to £4.98 per hour. The rate for workers under 18 who are no longer of compulsory school age rose to £3.68 per hour. Finally, the apprentice rate rose to £2.60 per hour. These rates are effective for pay reference periods starting on or after 1 October 2011.

What if 1 October 2011 fell within a worker's pay reference period? The hourly rate at which a worker is entitled to be paid in respect of any pay reference period is the one in force on the first day of that period. This means that, where a pay reference period began before 1 October 2011, the old rate of the national minimum wage will be the one to which the worker is entitled for that reference period only.

The main rate of the national minimum wage prior to 1 October 2011 was £5.93, the youth development rate £4.92, the young workers' rate £3.64, and the apprentice rate £2.50.

Can accommodation provided to employees be taken into account when calculating payment of the national minimum wage? Yes, if the employer provides a worker with housing as part of the job, a daily accommodation offset can be taken into account for the purposes of calculating whether or not the national minimum wage has been paid.

The daily accommodation offset rose from £4.61 to £4.73 on 1 October 2011. If the employer does not make a formal deduction in respect of accommodation, for national minimum wage calculation purposes, the sum of £4.73 per day will be added to the amount actually received by the worker.

Can employers use tips to count towards payment of the national minimum wage? No. A change to the legislation in 2009 made clear that tips, service charges, gratuities and cover charges cannot be used to make up the national minimum wage. If an employee's basic pay is at the national minimum wage level, any tips paid through the employer's payroll must be paid in addition to the employee's basic pay.

Does that mean that employers are obliged to pass on the full value of all tips to employees? No, there is no obligation on employers under the national minimum wage legislation to ensure that employees receive the full value of any tips paid by customers. However, they cannot use tips towards their obligation to pay the minimum wage.

Can a salary sacrifice arrangement reduce an individual's pay to below the level of the national minimum wage? No. A salary sacrifice occurs when an employee gives up the right to receive part of the wages due under the contract of employment. Usually, the sacrifice is made in return for the employer's agreement to provide the employee with some form of non-cash benefit in kind, such as childcare vouchers.

The sacrifice is achieved by varying the employee's terms and conditions of employment relating to pay. A salary sacrifice arrangement must not, however, reduce an employee's wages to below the level of the national minimum wage. This is because, apart from living accommodation (see above), non-cash benefits in kind such as meals and childcare vouchers that are provided instead of wages do not count towards the minimum wage.

Are students undertaking work experience entitled to the national minimum wage? A student attending a further or higher education course will not qualify for the national minimum wage in respect of a period of work experience if the work experience does not exceed one year and is a requirement of the course.

Does an employer need to provide evidence that it is meeting the requirements of the national minimum wage? Employers must keep records for three years after the pay reference period following the pay period that the records cover to show that they are meeting their obligations under the National Minimum Wage Act 1998. The records should be kept in the form of a single document for each worker.

Workers are entitled to inspect the records if they have reasonable grounds for believing that they have not been paid the national minimum wage. A worker can complain to an employment tribunal if the employer fails to produce records that have been requested in the correct manner.

XpertHR Small Business is the easy-to-use online resource specially tailored to small-and medium-sized businesses, which gives you simple, up-to-date guidance on all employment law and staff issues