National Minimum Wage: staying compliant

The bands

There are four rates, reviewed every April on the recommendation of the Low Pay Commission: the National Living Wage for workers aged 21 and over; a rate for 18 to 20 year olds; a rate for 16 and 17 year olds; and the apprentice rate, which applies to apprentices under 19 and to apprentices aged 19 or over in the first year of their apprenticeship. The rate for 18 to 20 year olds has been on a path to merge with the National Living Wage. Check gov.uk/national-minimum-wage-rates for the figures in force.

The rate follows the worker's age on the first day of the pay reference period. Birthdays matter: someone turning 21 mid-month moves to the higher rate from the next pay period, and payroll must catch it. Work-Lynx flags timesheet lines that fall below the band for the worker's age.

What counts as pay

Not everything on the payslip counts towards the minimum wage. Broadly:

• Counts: basic pay, bonuses and commission earned in the period, and the accommodation offset (a fixed daily amount, set each April, where you provide living accommodation).
• Does not count: tips and gratuities (however paid), the premium element of overtime or shift pay (only the basic rate portion counts), allowances that are not consolidated into pay (travel, tool, on-call), benefits in kind other than accommodation, and loans or advances.
• Reduces pay for minimum wage purposes: deductions or payments for items connected with the job (uniform, PPE, tools), for the employer's own use or benefit, and the value of accommodation charged above the offset.

What counts as working time

For time work (paid by the hour, the common case), you must pay for every hour the worker is required to be working or available at or near the workplace:

• Time before and after the shift when the worker is required to be there: opening up, briefings, handovers, cashing up, cleaning down, security searches.
• Travel between assignments during the working day (but not the ordinary commute from home to the first place of work and back).
• Training the employer requires, wherever it happens.
• Time on standby at the workplace when the worker cannot go home.
• Sleep-in shifts: following the Supreme Court in Mencap v Tomlinson-Blake (2021), only the hours awake for the purpose of working count, unless the contract provides otherwise.

The traps that catch small employers

These are the findings that appear most often on the government's naming lists:

• Uniform: requiring workers to buy specific clothing, or deducting for it, reduces their pay. A dress code that says "black trousers" is a requirement to buy, and HMRC has treated it as such.
• Unpaid trial shifts: a genuine short assessment can be lawful; a shift doing the job is work, and must be paid.
• Rounding down clock times: if the clock says 07:52 and you pay from 08:00, every worker every day is losing eight minutes. Pay from the time work starts. Work-Lynx clock-ins record actual times.
• Salaried staff on long hours: a salary divided by actual hours can fall below the minimum wage in a heavy week. For salaried hours work, the calculation runs over the year, but excess hours beyond the contract still have to be reconciled.
• Apprentices in their second year aged 19 or over: they move off the apprentice rate to the rate for their age. Payroll often misses the anniversary.
• Deductions for till shortages or damage: lawful only where the contract allows and, in retail, capped; either way, they reduce pay for minimum wage purposes.

Records: six years

You must keep records sufficient to show that each worker has been paid at least the minimum wage, for six years (extended from three in April 2021). Payslips alone do not do it; you need the hours. Clock records, rotas and timesheets, kept together and reconciled to pay, are the evidence. A worker can ask to see their records and can complain to HMRC or a tribunal if you cannot produce them; the burden then sits on the employer.

Enforcement

HMRC enforces the minimum wage on behalf of the Department for Business and Trade, triggered by worker complaints, targeted campaigns and risk profiling. If arrears are found, you repay them to every affected worker at the current rate (not the rate that applied when they were underpaid), and you pay a penalty of 200% of the arrears, up to a per-worker maximum, halved if you pay within 14 days. Employers with arrears above a threshold are named publicly. Deliberate refusal to pay is a criminal offence.

Workers can also claim in the tribunal as an unlawful deduction, and a dismissal for asserting the right to the minimum wage is automatically unfair from day one.

The admin this guide describes, done for you

Work-Lynx holds the records, calculates the entitlements, drafts the letters and reminds you of the dates: 49 UK policies, GPS clock-in, rotas, leave, timesheets, payslips and Employ AI for the questions in between. £2.50 a month plus £1 per employee, 14 days free, no card.