From the start of this month, the national minimum wage for workers aged 25 and over increased to £7.50. A recent case provides a timely reminder for company directors of the personal consequences of failing to meet this requirement by underpaying your workers. The case saw the director of Cygnets to Swans Limited being disqualified from acting as a director for 6 years.
The national minimum wage
The concept of a national minimum wage was introduced in the UK on 1 April 1999. Since that date, the law has set out a minimum hourly rate of pay to which most workers are entitled. There are actually five different rates depending on the category of worker with the highest rate, the ‘National Living Wage’, applying to those aged 25 or more (this is different to the voluntary minimum ‘Living Wage’ campaigned for by the Living Wage Foundation according to the basic cost of living). Complying with the requirements is not always straightforward as there are complex rules for determining which pay and benefits count in the calculation and exactly how many hours have been worked. This may have led to the problems at Cygnets to Swans Limited.