Are you paying the National Minimum Wage correctly?
Posted on 25th October 2024
Do any of your employees receive the National Minimum Wage (NMW) or National Living Wage (NLW)? HMRC is reminding employers to check they're paying NMW and NLW correctly.
It isn’t as simple as you might think because it involves more than the hourly rates you pay. It’s possible employees who receive minimum wages or slightly more are still underpaid.
Common minimum wage mistake for small businesses
HMRC says almost a third of small businesses don’t keep enough records to confirm they’re paying at least the NMW. As an employer you’re required to keep adequate records for a minimum of six years. There aren’t any rules about the records you should keep but you need to show:
all time worked, including overtime, travel during the working day and training
breaks and other absences such as sick leave or holidays
total pay for each employee for each pay period
any deductions from pay or expenses, including any accommodation costs.
Carry out a review
HMRC says employers should carry out a full review for all their employees. You can find information to help you on the GOV.UK website.
If you find mistakes, you must put them right straightaway and pay anything you owe to current and former employees. You can let HMRC know about any changes by making a voluntary declaration. If you do this, you shouldn’t be charged a penalty.
HMRC can also carry out checks and, if they find underpayments, you must repay employees and possibly penalties too. The Department for Business and Trade (DBT) might also name your business publicly.
HMRC created a video to explain what to do and how to put things right. ACAS has a helpline on 0300 123 1160 and provides online advice.
NMW/NLW checklist
Rate of pay. Almost all employees in the UK should receive at least the NMW. The rate depends on their age and whether they are an apprentice. Rates increase every April. From April 2024 they are:
|
Age |
Under 18 |
18 to 20 |
21 and over |
Apprentice (under 19 or in first year) |
|---|---|---|---|---|
|
Minimum hourly rate |
£6.40 |
£8.60 |
£11.44 |
£6.40 |
Deductions. Deductions for expenses connected with an employee’s job reducetheir pay for NMW purposes. For example, deductions for required uniforms, tools or equipment could mean they’re underpaid. It doesn't matter whether they buy things from you or a third party. There are also rules about charges for accommodation called the ‘accommodation offset’. This is currently £9.99 per day or £69.93 per week. If you charge more, this will reduce your employee’s NMW which could lead to underpayment. If accommodation is free, the offset rate is added to their pay.
Time worked. For NMW purposes you must include time when your employees are:
required to be at work, including time spent on tasks before or after the beginning or end of their shift
travelling for business or training training
on standby at or near their place of work.
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