NMWM05040 - Entitlement to National Minimum Wage: definitions of contract of employment, employee and employer
Relevant legislation
Contract of employment
Employee
Employer
Relevant legislation
The legislation that applies to this page is as follows:
- National Minimum Wage Act 1998, sections 54(1), 54(2) & 54(4)
- National Minimum Wage Regulations 2015, regulation 3(1)
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Contract of employment
The National Minimum Wage Act 1998, section 54(2), defines a 鈥渃ontract of employment鈥� as:
鈥�.. a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.鈥�
Employee
An 鈥渆mployee鈥� is defined in the National Minimum Wage Act 1998, section 54(1); as
鈥溾��..an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.鈥�
When considering entitlement to National Minimum Wage it is first necessary to determine that an individual is in fact a worker of an employer.
For minimum wage purposes, the definition of 鈥渨orker鈥� (NMWM05020) has a much broader definition than that of an 鈥渆mployee鈥� as it can also include workers who work under other forms of contracts (NMWM04060).
This broader definition means that whilst all 鈥渆mployees鈥� fall within the definition of a 鈥渨orker鈥� not all 鈥渨orkers鈥� will fall into the definition of 鈥渆mployee鈥�.
Employer
An 鈥渆mployer鈥� is defined in the National Minimum Wage Act 1998, section 54(4) as
鈥溾�he person by whom the employee or worker is (or, where the employment has ceased, was) employed.鈥�
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.