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HMRC internal manual

National Minimum Wage Manual

Status: General definition of a contract

A contract is basically an agreement (or promise) made between two or more parties which creates an obligation to do, or not do, something. A contract can be written, oral, implied or a combination of these.

All contracts comprise of:

  • an offer from one party, and
  • acceptance of the offer from the other.

The contract is formed when the offer from one party to make the contract is accepted by the other party.

For a contract to be valid and enforceable certain conditions must apply (NMWM04040).

For a person to be a worker (NMWM05020) and qualify for minimum wage they have to be working under a worker’s contract. A worker’s contract is formed when there is either;

  • A contract of employment (NMWM04050), or
  • Any other contract (NMWM04060) to personally perform work for another party (who is not a client or customer of an individual acting in a genuine self-employed capacity (NMWM05060)).

For minimum wage purposes a person working under a contract of apprenticeship is a worker (NMWM05230), entitled to paid at least the minimum wage subject to specific conditions (NMWM05250).