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Minimum Wage 2024: Guide for Employers

national minimum wage


The UK operates a National Minimum Wage (NMW) system, obligating employers to pay workers a minimum amount per hour. The rates are subject to regular reviews and typically increase each year in April.

UK employers have to stay informed about current NMW rates and comply with their obligations to pay workers at least their legal entitlement to avoid penalties and legal issues.

In this guide, we explain what the National Minimum Wage is, what the current rates are, and share best practice for employers to stay compliant when managing payroll.


Section A: Overview of Minimum Wage 2024


By law, employers must meet specific obligations in relation to workers’ pay under the National Minimum Wage provisions.


1. What is the National Minimum Wage?


The UK minimum wage is the legally mandated hourly wage that employers must pay their workers, ensuring fair compensation.

The rate varies by age and employment status, including categories for adult workers, younger workers and apprentices. It applies to most workers, including part-time, full-time, temporary, and casual staff.

Minimum wage rates are set by the UK Government and are reviewed annually, which typically results in increased rates each April.

Employers must ensure they are aware of any changes in rates and adjust their payroll accordingly.


2. Current Minimum Wage Rates


From 1 April 2024, the following National Minimum Wage Rates apply:


a. Age 21 or over ‘(National Living Wage’): £11.44 per hour

b. Age 18 to 20: £8.60 per hour

c. Under 18: £6.40 per hour

d. Apprentices: £6.40 per hour


3. Who Qualifies for the National Minimum Wage?


A wide range of workers across different employment types are entitled to the UK minimum wage, including full-time and part-time employees, apprentices, casual and temporary staff, and those on zero-hours contracts. Agency workers, agricultural workers, and workers paid by the number of items they make (piece workers) are also entitled to the minimum wage.

Domestic workers, such as cleaners and carers, whether they work in their employer’s home or elsewhere, must also receive the minimum wage unless they are related to the employer.

The NMW applies equally to workers regardless of whether they are permanent or temporary.

The only types of worker not covered by minimum wage regulations include company directors, those who are self-employed by choice, volunteers by choice, those in the armed forces, those doing work experience as part of a course, those who are work shadowing and those under school leaving age.


4. What is the National Living Wage?


The UK National Living Wage is the mandatory minimum hourly pay for workers aged 21 and over, designed to ensure fair compensation reflecting living costs and economic conditions.


5. Who Qualifies for the Apprentice Rate?


Workers are entitled to receive at least the apprentice rate if they are an apprentice and are either under 19 years old, or 19 or older and in the first year of their current apprenticeship agreement.

Those who are 19 or older and have completed the first year of their current apprenticeship must be paid at least the minimum wage for their age group.


Section B: Legal Requirements for Employers


Ensuring compliance with minimum wage laws is not only a legal obligation but also a crucial aspect of maintaining fair and ethical business practices.


1. Legal Framework


The legal framework governing the UK National Minimum Wage (NMW) is established by several key pieces of legislation, primarily designed to ensure fair pay and protect workers’ rights. The main components of this framework include:


a. National Minimum Wage Act 1998

This primary legislation introduced the NMW, setting out the legal requirement for employers to pay their workers at least the minimum hourly rate as defined by the law. It established the framework for calculating and enforcing the minimum wage.


b. Employment Rights Act 1996

This act includes provisions related to the enforcement of minimum wage laws, ensuring that employees have the right to fair pay and can seek redress if they are not paid the minimum wage.


c. National Minimum Wage Regulations 2015

These regulations provide detailed guidelines on how the minimum wage should be calculated, including specific provisions for different types of workers, such as apprentices, piece workers, and those on zero-hours contracts. They also outline the requirements for record-keeping and the penalties for non-compliance.


d. The National Minimum Wage (Amendment) Regulations

These are periodic updates to the original regulations, reflecting changes in the minimum wage rates as recommended by the Low Pay Commission and approved by the government. These amendments ensure that the minimum wage keeps pace with inflation and economic conditions.


e. Low Pay Commission

An independent body that advises the government on the minimum wage rates. The commission conducts research and consultation with various stakeholders to recommend appropriate wage levels that balance fair pay for workers with the economic impact on businesses.


f. Enforcement and Compliance

HM Revenue and Customs (HMRC) is responsible for enforcing the minimum wage laws. They conduct investigations and can issue penalties to employers who fail to comply with the regulations. Employers found in breach of the law may be required to repay arrears to underpaid workers and face financial penalties.


2. Legal Obligations for UK Employers


By law, employers must comply with the following obligations in relation to pay:


a. Paying the Correct Minimum Wage

Employers must pay workers at least the minimum wage rate applicable to their age group or apprentice status. The rates must be implemented from the date they come into effect.

Employers should review and adjust payroll systems to ensure employees are paid the correct rates from the first pay period after the changes.


b. Record Keeping

Employers are required to keep accurate records of all employees’ wages and working hours for at least three years. These records must be sufficient to prove that the correct minimum wage has been paid. This includes detailed records of any deductions made from wages and the reasons for those deductions.


c. Written Contracts and Payslips

Employers must provide all employees with a written statement of employment particulars, including details of their wage rates.

Employees must receive itemised payslips showing gross wages, deductions, and net wages.


d. Deductions and Payments

Employers must not make deductions from wages that would reduce pay below the minimum wage except for specific reasons allowed by law, such as tax and National Insurance contributions.

Any accommodation provided by the employer may affect the calculation of minimum wage compliance, with a maximum allowable deduction for accommodation offset.


e. Annual Reviews

Employers should conduct annual reviews of pay rates and ensure that any employees who become eligible for higher minimum wage rates due to age or changes in status receive appropriate pay increases.


3. Consequences of Non-Compliance


Employers who fail to pay the correct minimum wage may face fines of up to £20,000 per underpaid worker. The financial penalties can be substantial and impact the financial stability of a business.

The UK government also publishes the names of employers who fail to pay the minimum wage, which can damage a business’s reputation and brand image and result in difficulties recruiting new staff.

In addition, employers are required to repay all arrears to underpaid employees, calculated at the current minimum wage rate, not the rate at the time the underpayment occurred.

Employees can bring claims against their employers in an employment tribunal for non-payment of the minimum wage. This can result in additional legal costs and potential compensation payments.

In severe cases, non-compliance with minimum wage laws can lead to criminal prosecution, resulting in further fines and potential imprisonment for responsible individuals.


Section C: How to Calculate Minimum Wage for Different Types of Work


While the National Minimum Wage is calculated based on an hourly rate, it applies to all eligible workers regardless of how they are paid or how their pay is typically calculated. This means that regardless of how someone is paid, their equivalent hourly rate must be calculated to ensure they are receiving at least the minimum wage.

There are different methods for verifying that workers receive the minimum wage, depending on their payment structure.


1. Paid by the Hour


For workers paid by the hour, known as ‘time work,’ calculating the minimum wage is relatively straightforward. Employers must ensure that the hourly rate paid meets or exceeds the National Minimum Wage or National Living Wage, depending on the worker’s age and status.

To calculate, simply divide the total earnings by the number of hours worked within the pay reference period.


2. Paid an Annual Salary


For workers paid an annual salary under a contract for a basic number of hours each year, known as ‘salaried hours work,’ employers must ensure the total salary equates to at least the minimum wage for all hours worked.

Calculate the hourly rate by dividing the annual salary by the total number of contracted hours for the year. Ensure the resulting rate meets or exceeds the minimum wage.


3. Paid per Task or Piece of Work Done


For workers paid per task or piece of work done, referred to as ‘output work,’ employers must ensure that workers earn at least the minimum wage. To calculate the equivalent hourly rate, employers can either:


a. Pay a fair piece rate: Ensure that the rate per task is high enough that an average worker can earn at least the minimum wage per hour.


b. Conduct a test: Measure the time taken for each task and ensure the total pay for all tasks completed meets the minimum wage for the hours worked.


4. Paid in Other Ways (Unmeasured Work)


For workers paid in other ways, known as ‘unmeasured work,’ employers must estimate the number of hours typically worked and ensure the pay meets the minimum wage for those hours. This may involve keeping detailed records of hours worked or agreeing on a ‘daily average agreement’ with the worker, outlining the typical number of hours they are expected to work each day.

The total pay for the pay reference period must then be divided by the agreed number of hours to ensure the resulting hourly rate meets or exceeds the minimum wage.

It is advisable to use the government’s National Minimum Wage calculator to verify compliance with the regulations in relation to unmeasured work.


5. What is ‘Working Time’?


When calculating working time for all types of work, it is essential to include time spent at work while required to be working or on standby near the workplace, excluding rest breaks taken. Also include time spent not working due to machine breakdowns but remaining at the workplace, waiting to collect goods, meet someone for work, or start a job.

Travel related to work, including moving between work assignments, as well as time spent training or travelling for training, should also be counted.

Even if workers are allowed to sleep during certain work-related responsibilities, whether a place to sleep is provided or not, this time should be included.

However, do not include time spent travelling between home and work, away from work on rest breaks, holidays, sick leave, or maternity leave, or on industrial action. Also, do not count time when workers are allowed to sleep at or near the workplace, provided a place to sleep is available, and they are not required to be working.


Section D: Implementing Increases in National Minimum Wage


Employers must ensure they update affected workers’ pay accordingly and adjust their payroll systems in line with any increases in rates or when a worker becomes eligible for a higher rate.


1. When Wage Increases Take Effect


Workers may become entitled to a higher minimum wage rate under certain conditions:


a. Annual NMW Increases

Government changes in minimum wage rates typically come into effect each April.


b. Worker’s Age

A worker’s entitlement changes when they turn 18 or 21. For apprentices, the rate increases when they turn 19 and have already completed the first year of their current apprenticeship.

Similarly, an apprentice who is already 19 and finishes the first year of their apprenticeship will also see an increase in their wage rate.

In these circumstances, the higher rate applies from the next pay reference period after the increase, meaning the pay rise might not take effect immediately.

The ‘pay reference period’ is the time span that the pay covers. For instance, if an employee is paid daily, the pay reference period is one day. If paid weekly, it is one week, and if paid monthly, it is one month. The pay reference period cannot exceed one month.


2. Adjusting Payroll Systems


Begin by assessing the current payroll system to identify areas needing updates, such as wage rates, employee classifications, and deduction calculations. This step ensures that all necessary changes are accounted for and sets the foundation for an accurate update.

Adjust the minimum wage rates for all employees based on the new 2024 rates. It is crucial to ensure that the different rates are correctly applied to various employee categories, including adult workers, younger workers, and apprentices. This step ensures that all employees are paid according to the latest legal requirements.

Carry out tests to ensure the updated payroll system accurately calculates the new wages. During testing, verify that deductions, overtime, and other pay-related factors are correctly processed with the new rates. This step helps identify and correct any errors before the new rates take effect.

Payroll staff may require training to familiarise them with the updated system and new wage rates. Offering resources and support during this transition period is essential to address any questions or issues that may arise, ensuring a smooth implementation process.

Also ensure all employee records reflect the new wage rates and any relevant changes in their employment status. Communicate these changes to employees and provide updated documentation if necessary. Clear communication helps prevent confusion and ensures all employees are aware of their new pay rates.

Continuously monitor the payroll system after implementation to identify and resolve any issues. Make adjustments as needed to ensure ongoing accuracy and compliance. Regular monitoring helps maintain the integrity of the payroll system and ensures that any discrepancies are promptly addressed.


3. Timeline for Implementing Changes


Adjusting to new NMW rates requires planning to ensure all systems and records are updated in advance of the changes taking effect. A typical implementation timeline includes:


a. Preparation Phase (3 Months Before Implementation)

During this phase, review the current payroll system to identify any necessary updates that need to be made. Research and select the appropriate payroll software or services that will best suit your needs. Additionally, training sessions for payroll staff should be planned to ensure they are prepared for the upcoming changes.


b. Update and Testing Phase (2 Months Before Implementation)

In this phase, update the wage rates and other relevant payroll settings in the system. Conduct thorough testing to ensure accuracy and compliance with the new rates. Begin training payroll staff on the new system to familiarise them with the changes and processes.


c. Final Adjustments and Communication Phase (1 Month Before Implementation)

Make any final adjustments to the payroll system based on feedback from the testing phase. Update employee records to reflect the new wage rates and communicate these changes to employees. Provide additional support and resources to payroll staff to address any last-minute questions or issues.


d. Implementation Phase (Implementation Date)

On the implementation date, fully transition to the updated payroll system. Monitor the system closely for any issues that may arise and address them promptly to ensure a smooth transition.


e. Post-Implementation Phase (1-3 Months After Implementation)

Continue to monitor the payroll system and make any necessary adjustments to ensure it remains accurate and compliant. Conduct a review to ensure ongoing compliance and efficiency. Provide ongoing support and training for payroll staff as needed to address any new challenges or questions that may come up during this period.


Section E: Budgeting and Financial Planning


Minimum wage increases may require UK employers to adopt strategic budgeting and financial planning to manage the additional costs effectively. Effective financial planning helps businesses accommodate wage increases without compromising their financial stability or growth potential.


1. Budgeting to Accommodate Wage Increases


To accommodate wage increases, start by conducting a thorough review of the current budget to identify areas where adjustments can be made to cover the increased wage costs. Allocate additional funds to ensure that all departments and operations are considered. Implementing cost-cutting measures is another vital step. Focus on improving operational efficiency without compromising the quality of products or services. This might include renegotiating supplier contracts, optimising energy usage, or reducing discretionary spending to lower overhead costs.

Also consider increasing revenue streams to balance the increased wage expenses. Adjust pricing strategies to boost revenue while maintaining competitive advantage, and carefully evaluate the impact of price changes on customer demand. Diversifying offerings by introducing new products or services can also generate additional revenue streams to offset the higher wage costs.

Investing in employee productivity is crucial. Provide training and development opportunities to enhance productivity and efficiency, ensuring you maximise the return on the increased wage expenditures. Implement performance-based incentives to motivate employees towards higher productivity and better job performance, ensuring that wage increases lead to increased output and overall business growth.


2. Adjustments in Financial Forecasting


To accommodate wage increases, begin by updating financial projections to reflect the new costs. This involves revising income statements, balance sheets, and cash flow statements to ensure they accurately account for the higher wages. Conduct scenario analysis to understand the potential financial impact under various conditions, such as different levels of sales growth or changes in costs, to better prepare for future uncertainties.

Regularly monitor key financial indicators to maintain profitability. Keep a close watch on profit margins to ensure the business remains profitable despite the increased wages. Perform break-even analysis to determine the necessary sales volume required to cover the additional wage costs and sustain profitability. This proactive approach helps in making informed decisions about pricing, cost management, and sales targets.

When planning capital expenditures, consider deferring non-essential investments to free up funds for the increased wages. Prioritise investments that offer the highest returns or are critical to business operations, ensuring that essential projects are not compromised. Explore financing options such as loans, lines of credit, or leasing arrangements to manage large capital expenditures without depleting cash reserves. This strategic approach helps maintain financial stability while accommodating the new wage requirements.


3. Managing Cash Flow


Developing regular cash flow forecasts is essential to anticipate future cash needs and ensure sufficient funds are available to cover wage increases. By regularly updating these forecasts based on actual performance and changing business conditions, businesses can maintain accurate financial projections and make informed decisions. This proactive approach helps in identifying potential shortfalls and allows for timely adjustments to avoid financial strain.

Improving receivables management is another crucial step. Ensuring timely invoicing and following up on outstanding receivables can accelerate cash inflows. Additionally, reviewing and tightening credit policies can reduce the risk of late payments or defaults by customers, thereby improving the overall cash flow.

Efficient management of payables is equally important. Negotiating extended payment terms with suppliers can improve cash flow timing without damaging supplier relationships. Prioritising payments to essential suppliers and expenses ensures that critical operations are not disrupted while managing cash flow constraints. This strategic approach helps maintain a balance between meeting obligations and preserving cash.

Building a cash reserve or emergency fund provides a financial buffer against unexpected expenses or cash flow shortfalls. Regular contributions to this reserve are important, with a goal of accumulating enough funds to cover at least three to six months of operating expenses. This safety net can help businesses navigate financial uncertainties and maintain stability during challenging times.


Section F: Debunking Common Myths About the National Minimum Wage


The National Minimum Wage (NMW) in the UK is subject to several misconceptions that can lead to confusion among employers and employees. By understanding and addressing these common myths, employers can ensure they are compliant with the National Minimum Wage regulations, supporting fair and lawful employment practices.


Myth 1: Only Full-Time Workers Are Entitled to the Minimum Wage

The National Minimum Wage applies to all workers, regardless of whether they are full-time, part-time, casual, or temporary. This includes apprentices, trainees, agency workers, and those on zero-hours contracts.


Myth 2: The Minimum Wage Is the Same Across All Age Groups

The National Minimum Wage varies depending on the age of the worker and their status as an apprentice.


Myth 3: Employers Can Include Tips and Service Charges to Meet the Minimum Wage

Tips, gratuities, and service charges cannot be counted towards the National Minimum Wage. Employers must pay the minimum wage rate as a base salary, excluding any tips or additional payments received by the worker.


Myth 4: Small Businesses Are Exempt from Paying the Minimum Wage

All businesses, regardless of size, must comply with the National Minimum Wage regulations. There are no exemptions for small businesses.


Myth 5: Family Members Working in a Family Business Are Not Entitled to the Minimum Wage

Family members who work in a family business must be paid at least the National Minimum Wage if they have a formal employment contract or receive payment for their work. However, genuinely self-employed family members may be exempt.


Myth 6: Apprentices Only Need to Be Paid the Apprentice Rate for the Entire Apprenticeship

The apprentice rate applies only to those aged under 19 or in the first year of their apprenticeship. Once an apprentice is 19 or over and has completed the first year of their apprenticeship, they must be paid the appropriate minimum wage rate for their age group.


Myth 7: The National Minimum Wage Only Applies to Certain Jobs or Industries

The National Minimum Wage applies to nearly all jobs and industries in the UK. There are very few exceptions, and employers in all sectors must ensure they pay their workers at least the minimum wage.


Myth 8: Workers Can Agree to Be Paid Less Than the Minimum Wage

It is illegal for employers to pay less than the National Minimum Wage, even if a worker agrees to it. Such agreements are not legally binding, and workers are entitled to claim the difference if underpaid.


Myth 9: Employers Can Deduct Uniform Costs from the Minimum Wage

Employers cannot make deductions from wages that bring an employee’s pay below the minimum wage, except for specific, allowable deductions such as tax and National Insurance. Uniform costs cannot reduce wages below the minimum rate.


Myth 10: The Minimum Wage Only Needs to Be Paid After the Worker Has Worked for a Certain Period

Workers are entitled to the National Minimum Wage from their first day of employment. There is no qualifying period before the minimum wage must be paid.


Section G: Summary


UK workers have fundamental rights concerning their pay, which include the entitlement to the National Minimum Wage. These rights ensure that workers are compensated fairly for their work, regardless of their job type or payment method.

Employers are legally required to comply with NMW regulations. Delays or inaccuracies with pay can lead to financial penalties, legal issues, and damage to employee morale.

Ensuring compliance not only avoids legal repercussions but also promotes a fair and motivated workforce, supporting overall business stability and ethical practices.


Section H: Need Assistance?


As employer solutions lawyers, our employment law experts are on hand to answer any questions you may have about changes in the national minimum wage and complying with your pay-related obligations. For specialist advice, speak to us.


Section I: FAQs


What are the new minimum wage rates for 2024?
UK minimum wage rates vary by age, with workers aged 21 and over receiving at least £11.44 per hour under the National Living Wage, while those aged 18 to 20 get £8.60, and under-18s earn £6.40 per hour. Apprentices under 19 and those in their first year of an apprenticeship, regardless of age, are entitled to the apprentice minimum wage of £6.40 per hour.


When do the new minimum wage rates come into effect?
The new rates are effective from 1 April 2024. Employers must implement these changes from the first pay period after this date.


How do I update my payroll system to reflect the new rates?
You will need to review and adjust wage rates in your payroll software, test the system to ensure accuracy, train payroll staff on the updated processes and ensure all employee records are updated with the new rates.


What are the legal consequences of not complying with the new minimum wage rates?
Non-compliance can result in financial penalties of up to £20,000 per underpaid worker, public naming and shaming by the government, arrears payments to underpaid employees, potential claims in employment tribunals and, in severe cases, criminal prosecution.


What if I need professional advice to manage the wage changes?
You can contact DavidsonMorris for expert guidance on updating payroll systems, ensuring legal compliance or any other matter related to employee pay and statutory entitlements.


Section J: Glossary


Apprentices: Individuals who are in a training programme that combines practical work experience with formal education. Apprentices are often paid at a lower wage rate during their training period.

BEIS (Department for Business, Energy & Industrial Strategy): A UK government department responsible for economic growth, energy policy, and business regulation, including oversight of minimum wage policies.

Break-Even Analysis: A financial calculation to determine the sales volume at which total revenues equal total costs, indicating no profit or loss.

Cash Flow: The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Compliance: Adhering to laws, regulations, and guidelines. In the context of minimum wage, it means ensuring that all employees are paid at least the legal minimum wage.

Deductions: Amounts subtracted from an employee’s gross wages, such as taxes, National Insurance, pension contributions, and other authorised deductions.

Financial Forecasting: The process of estimating future financial outcomes by examining historical data, current trends, and expected business activities.

HR (Human Resources): The department within a business that handles recruitment, employee relations, payroll, benefits, and compliance with employment laws.

Living Wage: A wage rate that is higher than the minimum wage and is based on the cost of living, ensuring that workers can afford a basic standard of living.

Minimum Wage: The lowest legal hourly wage that employers must pay their workers. It varies by age and employment status, such as apprentices.

National Living Wage: A higher minimum wage rate that applies to workers aged 23 and over in the UK, intended to ensure a higher standard of living.

PAYE (Pay As You Earn): A system for collecting income tax and National Insurance from employees’ wages directly through their employer’s payroll system.

Payroll System: A system used by businesses to manage the calculation, distribution, and reporting of employees’ wages and deductions.

Profit Margins: A measure of prauthorisedy calculated as net income divided by revenue. It indicates how much of each pound earned is retained as profit.

Scenario Analysis: A process of analysing possible future events by considering alternative possible outcomes (scenarios). This helps in strategic planning and risk management.

Self-Employed: Individuals who work for themselves rather than being employed by a company. They are responsible for their own tax and National Insurance contributions.

Statutory Sick Pay (SSP): A legal requirement for employers to pay sick pay to employees who are unable to work due to illness for more than four consecutive days.

Wage Rates: The amount of money paid to a worker per hour of work. Wage rates can vary based on factors such as age, job role, and experience.

Zero-Hours Contract: A type of employment contract where the employer is not obliged to provide any minimum working hours, and the worker is not obliged to accept any work offered.


Section K: Additional Resources


National Minimum Wage and Living Wage calculator for workers


Low Pay Commission (LPC)
The LPC provides recommendations on the National Minimum Wage and National Living Wage rates, ensuring they reflect economic conditions.


HM Revenue & Customs (HMRC) – National Minimum Wage Enforcement
Information on how HMRC enforces minimum wage laws, including how to report non-compliance.


UK Government – Working Hours and Time Off
Guidance on working hours, breaks, and time off to ensure compliance with employment laws, including the minimum wage.


Unison – Minimum Wage
Resources and support from the UK’s largest trade union for public services regarding minimum wage entitlements.


GOV.UK – Business Support Helpline
Assistance for businesses on various topics including compliance with minimum wage regulations.


UK Government – Apprenticeships
Information on apprenticeship standards, rights, and pay rates.




Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.

She is a recognised by Legal 500and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.

Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals

About DavidsonMorris

As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility.

Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners, we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.

Legal Disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct at the time of writing, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.

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