Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Labour Provider Guidance

From
HM Revenue & Customs
Updated
, see all updates

Stakeholders: National Minimum Wage

During the course of Labour Provider (LP) casework, you may discover that the employer is failing to pay the national minimum wage (NMW).

Rates

Minimum wage rates (web) normally change every 1 October.

By law, anyone over school leaving age working legally in the UK must be paid at least the NMW. The NMW applies to new and existing workers regardless of how they are paid.

Records

Employers must keep sufficient records to be able to demonstrate that workers are paid at least NMW rates. These could include:

  • A record of all time worked, including work done outside a worker’s contracted hours.
  • A record of all payments made, including overtime payments, bonuses and commission, before any deductions are made.
  • A worker’s name, address and date of birth.

Employers must keep records for at least three years from the end of the pay reference period to which the records relate. They are advised to keep records for six years, since that is the limitation for a claim in civil proceedings (five years in Scotland).

Risk referrals

You can pass information to the NMW Risk team through the referrals form on the RIS site.

The NMW Risk team needs to know about:

  • Any situation where you think NMW is not being paid.
  • Where pay is low and the employer is providing living accommodation to the worker(s), either free of charge or for which a charge or deduction is made.
  • Poor records, particularly where the number of hours worked is not being recorded.
  • Where pay is low and the employer records are insufficient to let you work out the hourly rate of pay.

Key national minimum wage failings

Failure to record working time properly

Are workers required to arrive for work early or leave work late?

Are they asked to do stock takes outside of their normal working hours?

If the answer to these two questions is yes, then the workers must be paid the National Minimum Wage (NMW) for this additional time, as well as for their normal working hours.

Apprentices

From 1 October 2010 all apprentices aged under 19 or over 19 and in the first 12 months of their apprenticeship are entitled to the NMW apprentice rate for all the time they are in work or training.

Apprentices aged 19 or over and no longer within the first 12 months of their apprenticeship should get at least the rate appropriate to their age.

Deductions from pay

In most cases, a worker’s NMW pay is only arrived at after taking into account any deductions an employer has made to cover expenses like uniform, tools, transport and the purchases of goods and services.

It does not matter whether or not the worker has agreed to the deductions.

Piece rates

Some workers are paid per item produced. However if the worker is required to work fixed hours then they must receive at least the NMW for those fixed hours.

Accommodation

Employers are regarded as providing living accommodation in a variety of circumstances, not just when they are a worker’s landlord.

If they provide living accommodation free of charge, a notional amount is added to a worker’s NMW pay.

If an employer charges workers for the provision of living accommodation these charges effect the payment of NMW, even if the accommodation is not directly connected to the employment and the employer is not the landlord. The NMW pay is reduced by any amount the employer charges which is over and above the appropriate accommodation offset rate.

During the course of LP casework, you may discover that the employer is failing to pay the NMW or there are status issues.

More guidance is available if you have concerns