National Minimum Wage Compliance for Employers

As an employer, having a good understanding of the National Minimum Wage (NMW) and the National Living Wage (NLW) is essential. You are legally required to pay your employees the correct wage they qualify for; failure to do so will result in a substantial fine or even a criminal conviction. The NMW and NLW are two separate terms, so it is crucial that you are aware of the differences between the two. There are different rates of pay depending upon the age of the employee in question.

Here at Analysis Legal, we understand that some employers may have trouble navigating the NMW and NLW to ensure compliance with the law. Our specialist team of employment solicitors have the knowledge and experience to aid you and your business with numerous employment matters.

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What is the National Minimum Wage?

The NMW is the minimum hourly rate employees are legally entitled to. Under the National Minimum Wage Act 1998, the law requires all businesses, regardless of size, to pay fair and legal wages to all workers. Every year in April, the pay rate for the NMW changes to reflect the current cost of living.

Workers of at least compulsory school leaving age (16 years old), or apprentices, are legally entitled to NMW whether full-time or part-time, doing essential training, or working in a small or ‘start-up’ business.

NMW must also be paid to the following workers:

  • Agency staff
  • Agricultural workers
  • Apprentices
  • Casual labourers
  • Casual workers
  • Employees on probation
  • Foreign workers
  • Home workers
  • Offshore workers if they “ordinarily work” in the UK
  • Seafarers
  • Workers on commission
  • Workers paid by piece
  • Zero-hours workers


There are some exceptions to the NMW legislation, including:

  • Those who are self-employed by choice
  • Those who volunteer by choice
  • Those in the armed forces
  • Those who are work shadowing
  • Those on a work placement as part of a course
  • Those under school leaving age
  • Those in a company director position

If you are unsure whether a worker is entitled to receive the NMW, our specialist employment solicitors are on hand to help. We can assess the criteria and assist you in determining how much an employee should receive in line with current legislation.


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What is the National Living Wage?

Just like the NMW, paying the NLW is a legal requirement for employers, regardless of the size of your business. However, unlike the NMW, the NLW currently applies only to those aged 23 years and over. However, from April 2024, the NLW is due to apply to those aged 21 and over.   The NLW is also reviewed annually in April and typically increases with the current cost of living.

The NLW can vary depending on location. For example, in London, the living wage paid to workers is higher than in other parts of the UK, reflecting London’s higher cost of living.

The same criteria applies to the NLW as in the case of the NMW. Workers who meet the age standards are legally entitled to receive the NLW whether they work full-time, part-time, casually, on a zero-hours contract, or any of the criteria mentioned above which applies to the NMW. Likewise, the same exceptions that apply to the NMW also apply to the NLW, including those who are self-employed or volunteering by choice.

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Enforcement for Underpayment and Common Pitfalls

HMRC can investigate any concerns raised regarding an employer’s failure to comply with National Minimum Wage requirements. If HMRC finds that an employer has not paid the legal minimum wage, they may issue a Notice of Underpayment; they can also “name and shame” an employer; or seek recovery of any underpayment through the tribunals or civil courts.  In some cases, they can pursue a criminal prosecution.  Individuals who have been underpaid can also bring an unlawful deduction from wages and/or breach of contract claim before an employment tribunal.

Some common National Minimum Wage pitfalls to be aware of include:

  • Not paying for all hours worked – It is essential that accurate time records are kept to ensure that employees receive payment for every hour worked, including, where relevant, any time spent carrying out work before or after their usual working hours. Any pay relating to expenses e.g. for travel (except getting to and from work)  must not count towards the national minimum wage.
  • Deducting employee expenses – Some employers charge their staff for expenses such as uniforms and equipment. However, you cannot use this as a reason to pay workers less than the NMW rate.
  • Including service charges, tips and gratuities – Service charges are often added in the hospitality industry and are generally shared out amongst all staff. However, service charges, together with tips and gratuities, must not count towards a worker’s pay.
  • Deducting from benefits in kind – Benefits offered by a business, such as company vehicles, medical insurance, free lunches and childcare vouchers, must not be calculated into a worker’s pay.


Contact Analysis Legal Today

At Analysis Legal, we are a team of specialist Employment Law Solicitors in Manchester. We are experts in advising organisations and businesses all over the UK, from our office in Stockport related to matters involving employment law for employers.

We pride ourselves on our excellent level of client service, which focuses on the needs and requirement of your business. We are industry-leading experts for managers, HR representatives and business owners.

Analysis Legal understands your business, your requirements, and your values. We focus on this so that we can provide you the best service that is possible. We understand that every business is different, which is why all of our advice is tailored to your specific needs.

Please do not hesitate to contact us for further advice on the correct application of the National Minimum Wage. We are here to help you ensure your business operates legally in line with the most current employment legislation.

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