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HMRC internal manual

National Minimum Wage Manual

Pay reference periods & elements of pay: national minimum wage pay - payments from the employer to the worker which count as remuneration

Relevant legislation

The legislation that applies to this page is as follows:

* National Minimum Wage Act 1998, section 55 

For pay reference periods commencing

* on or after 6 April 2015; National Minimum Wage Regulations 2015, regulations 3, 9, 9(1) & 10(a)-(e), 10, & 16
* before 6 April 2015; National Minimum Wage Regulations 1999 regulations 2, 8, 9, 30 & 36 

For national minimum wage purposes, payments paid by the employer to the worker mean:

  1. actual money payments
  2. paid by the employer
  3. to the worker (NMWM05020).
  4. in his capacity as a worker
  5. before any deductions are made.

If a payment satisfies the conditions shown above, it can count towards the worker’s total remuneration for the pay reference period (NMWM09050).

Amounts which do not count towards national minimum wage pay

Payments for national minimum wage purposes do not include any:

  • payment of an advance made under an agreement for a loan or by way of an advance of wages (NMWM09210)
  • payment by way of a pension, an allowance or gratuity in connection with the worker’s retirement or as compensation for loss of office (NMWM09200)
  • payment of an award made by a court or tribunal (or to settle proceedings which have or might have been brought before a court or tribunal) unless it is a payment due under the worker’s contract (NMWM09120)
  • payment related to a worker’s redundancy (NMWM09290)
  • payment by way of an award under a staff suggestion scheme (NMWM09330)
  • benefits in kind (whether or not they have a monetary value) except amounts treated as payments for living accommodation in certain circumstances (NMWM10000)
  • vouchers, stamps or similar documents which can be exchanged for money, goods or services provided by the employer to the worker (NMWM09350).
  • payments in respect of arrears of NMW. These are payments deriving from a statutory right and not the worker’s contract.
  • repayments of income tax &/or national insurance contributions.

These must be ignored when calculating a worker’s total remuneration for national minimum wage purposes.