Last amended by Employment Act 2008 in 2008. Strengthened enforcement — introduced automatic penalties and the 'fair arrears' rule requiring arrears to be repaid at current rather than historic rates, and reformed the criminal offences.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Summary
The National Minimum Wage Act 1998 created a statutory floor on pay for almost all workers in the United Kingdom, ending the previous reliance on sector-specific wages councils. It establishes a single right for qualifying workers to be paid at least the minimum hourly rate (s.1), leaves the actual rates and the detailed rules on which hours count to be set by regulations, and creates the independent Low Pay Commission to advise on the rate. Employers must keep records, workers have a right to inspect them, and compliance is enforced by HMRC officers through civil notices of underpayment and penalties, backed by criminal offences for the most serious breaches.
Key Points
- Right to the national minimum wage (s.1) — qualifying workers must be paid at least the prescribed hourly rate, which is set by regulations and reviewed annually
- Rates differ by age band, with the National Living Wage applying to the oldest band (currently workers aged 21 and over)
- Low Pay Commission (ss.5-8) — an independent body that recommends the rates to the Government
- Record-keeping (s.9) and a worker's right of access to those records (s.10)
- Right to additional remuneration where a worker has been underpaid (s.17), enforced by HMRC through notices of underpayment (s.19)
- Criminal offences (s.31) including refusal or wilful neglect to pay the minimum wage and failure to keep records
Parts & Sections
Amendments History
2008 — Employment Act 2008
Strengthened enforcement — introduced automatic penalties and the 'fair arrears' rule requiring arrears to be repaid at current rather than historic rates, and reformed the criminal offences.
Frequently asked questions
- What is the main purpose of the National Minimum Wage Act 1998?
- The National Minimum Wage Act 1998 creates a statutory floor on pay for almost all workers in the United Kingdom. It establishes a single right for qualifying workers to be paid at least the minimum hourly rate. This legislation ended the previous reliance on sector-specific wages councils and sets out the framework for calculating rates, keeping records, and enforcing compliance through HMRC.
- Who is entitled to receive the national minimum wage?
- To qualify for the national minimum wage, a person must be a worker and be over compulsory school age. They must be paid for work performed in a pay reference period at no less than the prescribed national minimum wage. The specific hourly rates are set by regulations and reviewed annually, with different rates applying based on age bands.
- What is the role of the Low Pay Commission?
- The Low Pay Commission is an independent body established under the Act. Its role is to recommend the national minimum wage rates to the Government. The actual rates and detailed rules regarding which hours count towards the wage are set by regulations, which are informed by the Commission's advice.
- What record-keeping duties do employers have under the Act?
- Employers are legally required to keep records sufficient to establish that workers are being paid at least the minimum wage. Workers have a statutory right to access and inspect these records. Failure to keep or preserve these records can result in criminal offences, including refusal or wilful neglect to pay the minimum wage.
- What happens if an employer fails to pay the minimum wage?
- If a worker is underpaid, they have a contractual right to recover the shortfall between what they were paid and the minimum wage. HMRC enforcement officers can issue a notice of underpayment, requiring the employer to pay the arrears to the worker and a penalty to the Secretary of State. Serious breaches can also lead to criminal prosecution.