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National Minimum Wage

EH SolicitorsBlogNational Minimum Wage



National Minimum Wage

National Minimum Wage

National Minimum Wage

Investigations conducted by HMRC over the period of 2 years have revealed that in excess of 2,400 care workers did not receive the National Minimum Wage (NMW).  HMRC has found arrears of £340,000 which has resulted in fines of over £110,000.

Some reasons given for the failure to pay the NMW relate to illegal deductions including uniform costs, not paying for time spent on training or travelling between care jobs.  This leads to the question, “What counts towards NMW?”

  1. Basic salary
  2. Bonus, commission and other incentive payments based on performance
  3. Piecework payments
  4. Accommodation allowance
  5. Allowances paid by way of HMRC dispensation agreements

More importantly, what doesn’t count?

  1. Benefits in kind whether or not they have a monetary value
  2. Loans by the employer or advances of wages
  3. Pension payments
  4. Lump sum payments on retirement
  5. Redundancy payments or other settlements
  6. Any premium paid for overtime or shift work
  7. Any allowances or payments that are not attributable to the employee’s performance, for example London weighting or an on-call allowance
  8. Expenses or allowances, including repayment of money spent in connection with the job
  9. Expenses for travel to a temporary workplace that are eligible for tax relief under the Income Tax (Earnings and Pensions) Act 2003
  10. Tips and gratuities paid by the employer through its payroll
  11. Some payments in respect of absences

The worker must still be left with at least the NMW after these deductions and payments have been taken into account:

  1.  Deductions in respect of expenditure in connection with employment (e.g., the cleaning of uniforms)
  2. Payments paid in the reference period on account of the worker’s expenditure in connection with employment
  3. Deductions for the employer’s use or benefit (for example, a deduction for meals)
  4. Any payment or deduction in respect of the provision of living accommodation to the extent that it exceeds the accommodation allowance
  5. Any other deduction or payment due from the worker to the employer in the reference period that the employer retains, or is entitled to retain, for its own use and benefit

The current rates (as of 1 October 2013) are:

  • £6.31 per hour for adult workers (21+)
  • £5.03 per hour for 18-to-20-year-olds
  • £3.72 per hour for under-18s who have finished compulsory education
  • £2.68 per hour for apprentices under 19 years old or 19 or over and in the first year of their apprenticeship

For further information or to discuss an employment law query, please telephone Ian Hass on 0800 197 3560 or email him at [email protected].

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