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 National Minimum Wage

Pay and the National 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 National Minimum Wage

The National Minimum Wage (NMW) is a legal right which covers almost all workers above compulsory school leaving age.

There are different NMW 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.

Failing to pay the NMW is a criminal offence. Dismissing a worker because they become eligible or complain about not being paid it is unfair dismissal.

You may be required to prove that you are paying the NMW and this means that you must keep sufficient records and allow access to them if required.

The accommodation offset

An employer who provides accommodation to an employee is allowed to count an amount, known as the accommodation offset, towards their NMW pay, 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 National 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 National 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

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 © 2022 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).