Law guide: Employment

See how we helped Michael

"Fantastic! The legal document I used was so comprehensive and easy to complete. It is very reassuring to know my business now has this level of protection"

Michael S, London

Pay and the minimum wage

Pay and the minimum wage

Pay statements

An employer must ensure that all employees are provided with written pay statements showing:

  • Their gross pay
  • All deductions made
  • Their net pay and, if paid in more than one way, the amounts and method of each part payment

The minimum wage

The National Living Wage (for those aged 21 and over) and National Minimum Wage are a legal right that covers almost all workers above compulsory school leaving age.

There are different rates for different age groups. There is also a different rate for apprentices who are either under 19 or in the first year of their apprenticeship.

The rates change every year in April. See GOV.UK for the current rates.

The accommodation offset

An employer who provides accommodation to an employee is allowed to count an amount, known as the accommodation offset, towards their minimum wage calculation, even if it is being provided free of charge. See GOV.UK for the current accommodation offset rate.

What payments do not count towards the minimum wage?

  • If you pay for or subsidise meals, uniforms, private health care, motoring costs or other 'benefits in kind' for your employees, these don't count towards the calculation of the minimum wage, even if they are taxed as income
  • Tips, gratuities or service charges paid (even if paid through the payroll)
  • Expenses paid to your employee for travelling to a temporary workplace, which is treated by you as deductions from earnings under section 338 of the Income Tax (Earnings and Pensions) Act 2003. i.e. if you operate a scheme where your employees sacrifice a proportion of their salary that is replaced with a 'tax free' expenses payment for travelling to a temporary workplace.
  • Loans to your employees
  • Pension payments
  • Payment for working overtime
  • Retirement lump sums
  • Redundancy payments

Note: New rules regarding tips are expected to be in force from 1 July 2024. They will apply to employees and workers (including agency staff and zero-hours workers). Employers must:

  • Ensure that 100% of all customer tips, including those paid by credit card, are distributed to staff without any deductions. It will be unlawful to deduct bank or administrative charges from tips.
  • Make payment in full no later than the end of the month in which the tip was paid by the customer.
  • Have a written policy on distribution of tips to staff and follow a statutory Code of Practice.

See Calculating the minimum wage, for more information.

Guaranteed pay

In some cases employees who are laid off may be entitled to payment. A lay off is not the same as a redundancy and the regulations covering each situation are very different. Advice should be sought to ensure the correct payments are made.

Copyright © 2024 Epoq Group Ltd. All trademarks acknowledged, all rights reserved

This website is operated by Epoq Legal Ltd, registered in England and Wales, company number 3707955, whose registered office is at 2 Imperial Place, Maxwell Road, Borehamwood, Hertfordshire, WD6 1JN. Epoq Legal Ltd is authorised and regulated by the Solicitors Regulation Authority (SRA number 645296).

Our use of cookies

We use necessary cookies to make our site work. We would also like to set some optional cookies. We won't set these optional cookies unless you enable them. Please choose whether this site may use optional cookies by selecting 'On' or 'Off' for each category below. Using this tool will set a cookie on your device to remember your preferences.

For more detailed information about the cookies we use, see our Cookie notice.

Necessary cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Functionality cookies

We'd like to set cookies to provide you with a better customer experience. For more information on these cookies, please see our cookie notice.