Guidance

Guidance notes on the notice of underpayment — NMW FS3

Updated 12 May 2026

We are responsible for making sure that employers pay their workers at least the correct rate of National Minimum Wage (NMW) and National Living Wage (NLW). We do this under the National Minimum Wage Act 1998.

This factsheet tells you about National Minimum Wage arrears and penalties.

We’re working in partnership with the Fair Work Agency and are responsible for making sure employers pay their workers the correct rate of NMW and NLW.

We do this under the National Minimum Wage Act 1998 and the Employment Rights Act 2025.

Where we mention NMW in this factsheet, we also mean the NLW.

Why we’ve given you this notice of underpayment

We’ve issued you a notice of underpayment (NoU) because you didn’t pay the correct rate of NMW to your workers. You’ll receive a NoU even if you’ve paid some or all of the amounts due from our check.

The start of a check is the date we first contacted you.

How we work out the unpaid amounts

We work out the unpaid amounts of NMW using the relevant day for each individual worker.

The relevant day is the day when a worker has been identified as being paid below the correct rate of NMW for one or more pay reference periods. If there’s more than one worker named on the NoU, the relevant day may be different for each worker.

We work out arrears using current NMW rates. For current rates, go to GOV.UK and search ‘National Minimum Wage and National Living Wage rates’.

For more information on how we work out arrears, go to GOV.UK and search:

• calculating the minimum wage
• NMW and NLW calculator for employers

Why you’ve been charged a penalty

As you have not paid the correct NMW to your workers a financial penalty is also due.

We charge this under Section 107 of the Employment Rights Act 2025 unless the Secretary of State has set out circumstances where we should not charge a penalty.

Working out the amount of the penalty

We work out the penalty at 200% of the underpayment for each worker. There is a minimum charge of £100 for each NoU and a maximum charge of £20,000 for each worker.

How to appeal against a NoU

You have the right to appeal against a NoU to an employment tribunal. You must do this within 28 days of the day the notice is given to you.

The day we consider the notice is given to you is:

• the same day as the date on the NoU — if it’s delivered by hand
• the same day as the date on the NoU — if it’s sent by email before 4.30pm
• the day after the date on the NoU — if it’s sent by email after 4.30pm
• 2 working days from the date on the NoU — if it’s sent in the post

You can appeal against:

• our decision to serve the NoU
• the amount we tell you is owed to a worker
• the penalty

You can also appeal a replacement NoU if it includes a worker which was not included in the original NoU.

For general information about making a claim to an employment tribunal, go to GOV.UK and search ‘Make a claim to an employment tribunal’.

For guidance on how to make a claim, go to GOV.UK and search ‘Making a claim to an employment tribunal (T420)’.

Where to find the appeal form

If you appeal a NoU, you must use a specific NMW appeal form.

For employers in:

• England, Wales and Scotland — go to GOV.UK and search ‘Make a claim to an employment tribunal: Form ET1’
• Northern Ireland — go to www.employmenttribunalsni.co.uk, choose ‘how to make a claim’ and follow the instructions.

You must make an appeal with the employment tribunal (or in Northern Ireland, an Industrial Tribunal) within 28 days of the day the notice is given to you.

If the appeal is successful, the tribunal may:

• change the amounts you owe
• change the penalty you have to pay
• decide you no longer owe any amount or penalty

Suspension of the penalty

If you appeal against a NoU, we’ll suspend collection of the penalty. If the appeal is then withdrawn or dismissed, we’ll reinstate the penalty and you’ll need to pay it.

More Information

For more information about:

• enforcement of the NMW — go to GOV.UK and search ‘National Minimum Wage law: enforcement’
• operating PAYE and National Insurance contributions on the payment of NMW arrears — go to GOV.UK and search ‘CWG2: further guide to PAYE and National Insurance contributions’
• paying NMW penalties — go to GOV.UK and search ‘Pay taxes, penalties or enquiry settlements’
• the Fair Work Agency — go to GOV.UK and search ‘Fair Work Agency’.