Entitlement to national minimum wage: definitions of contract of employment, employee and employer
The legislation that applies to this page is as follows:
* National Minimum Wage Act 1998, sections 54(1), 54(2) & 54(4)
For pay reference periods commencing
* on or after 6 April 2015; National Minimum Wage Regulations 2015, regulation 3(1) * before 6 April 2015; National Minimum Wage Regulations 1999, regulation 2(1)
Contract of employment
The National Minimum Wage Act 1998, section 54(2), defines a “contract of employment” as:
“.. a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.”
An “employee” is defined in the National Minimum Wage Act 1998, section 54(1); as
“…..an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.”
When considering entitlement to NMW it is first necessary to determine that an individual is in fact a worker of an employer.
For minimum wage purposes, the definition of “worker” (NMWM05020) has a much broader definition than that of an “employee” as it can also include workers who work under other forms of contracts (NMWM04060).
This broader definition means that whilst all “employees” fall within the definition of a “worker” not all “workers” will fall into the definition of “employee”.
An “employer” is defined in the National Minimum Wage Act 1998, section 54(4) as
“…the person by whom the employee or worker is (or, where the employment has ceased, was) employed.”
The National Minimum Wage Regulations 1999 include an addition to the definition so that, for national minimum wage purposes, an “employer” relationship exists when someone is provided to work by an agency (NMWM05110).
Where an employer maintains that a person is not a worker (and therefore outside the scope of national minimum wage legislation) it may be necessary to investigate the status (NMWM04000) of the worker to determine whether they fall within the definition of a worker according to the National Minimum Wage Act 1998.