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HMRC internal manual

National Minimum Wage Manual

Pay reference periods and elements of pay: national minimum wage pay - reductions from a worker’s total remuneration

Relevant legislation

The legislation that applies to this page is as follows:

* National Minimum Wage Regulations 2015, regulations 11 to 15

National minimum wage legislation determines which payments to take into account as a worker’s total remuneration for a pay reference period (NMWM09050). To find a worker’s national minimum wage pay (NMWM09060) their total remuneration in each pay reference period must then be reduced by:

  • payments paid in one pay reference period but treated as paid in another (NMWM09250). This avoids amounts from being counted towards national minimum wage pay twice.
  • some payments in respect of absences from work (NMWM09080)
  • for time work and output work, payments paid at a premium rate (NMWM09270) and (NMWM09280)
  • some payments by way of an allowance (NMWM09090)
  • payments representing amounts paid by customers by way of a service charge, tip, gratuity or cover charge (NMWM09340)
  • payments to reimburse expenses incurred by the worker in connection with their employment (NMWM09170)
  • payments made by the employer in respect of travelling expenses (and any associated payments for subsistence or accommodation) which are allowed as a deduction from earnings under section 338 of the Income Tax (Earnings and Pensions) Act (see NMWM09175 and NMWM11110)

AND account must be taken of the effect of

  • some deductions made from the worker’s pay (NMWM11020)
  • some payments made by the worker to either the employer or a third party (NMWM11030)
  • amounts the employer charges for living accommodation in excess of the accommodation offset (NMWM10010)

Care must always be taken to establish the true nature of payments. Labels can sometimes be misleading; for example a payment described as an “allowance” could actually be an expense payment or a bonus.