National Minimum Wage and Living Wage: accommodation
Effect on the minimum wage
This effect of accommodation rates on the National Minimum Wage or National Living Wage depends on how much an employer charges for accommodation.
It鈥檚 calculated by 鈥榩ay period鈥�, the intervals at which someone is being paid. This can be weekly, monthly or in irregular intervals like every 10 days.
If the accommodation is free, it still affects the minimum wage. There is an offset rate of 拢10.66 per day for this.
It does not matter if the cost of the accommodation is taken from the worker鈥檚 wages beforehand or if the worker pays the cost after they get their wages.
Examples
Example 1: accommodation is free
John is 24 and gets 拢10.60 an hour. This is below the National Living Wage (which he should get as he鈥檚 over 23).
He works 30 hours a week.
He gets paid every 7 days (his pay period).
His employer provides free accommodation 7 days a week.
This brings John鈥檚 pay up to 拢13.09 an hour, which is above the National Living Wage of 拢12.21.
Calculation:
-
拢10.66 (offset rate used when accommodation is free) 脳 7 (days accommodation provided in pay period) = 拢74.62
-
拢74.62 + (拢10.60 脳 30 - the total pay in reference period) = 拢392.62
-
拢392.62 梅 30 (total hours in pay period) = 拢13.09
Example 2: accommodation is charged below the maximum rate
Lisa is 20 and gets 拢10.30 an hour. This is above the National Minimum Wage.
Her employer charges 拢6.50 per day for accommodation which is below the threshold of 拢10.66. No offset rate is applied.
The accommodation charge does not affect Lisa鈥檚 pay of 拢10.30 an hour.
Example 3: accommodation is charged above the maximum rate
Sam is 35 and gets 拢12.25 an hour. This is above the National Living Wage (which he should get as he鈥檚 over 21).
He works 40 hours a week.
He gets paid every 3 weeks (his pay period).
His employer charges 拢11.50 per day for accommodation.
Sam lives in the accommodation full time which is 21 days for his pay period.
This brings Sam鈥檚 pay down to 拢12.11 an hour, which is below the National Living Wage.
Calculation:
-
拢12.45 (hourly rate) 脳 120 (total hours in pay period) = 拢1,470
-
拢11.50 (accommodation rate) 脳 21 (days accommodation provided in pay period) = 拢241.50
-
拢10.66 (offset rate used when accommodation is free) 脳 21 (days accommodation provided in pay period) = 拢223.86
-
拢1,470 (total pay in pay period) 鈥� 拢241.50 (total accommodation cost in pay period) + 拢223.86 (total accommodation offset in pay period) = 拢1,452.36
-
拢1,452.36 梅 120 (total hours in pay period) = 拢12.11