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HMRC internal manual

National Minimum Wage Manual

Deductions and payments from workers: administrative charges and fees

Relevant legislation

The legislation that applies to this page is as follows:

* National Minimum Wage Regulations 2015, regulations 12(1) & 12(2)(e)

An employer is entitled to make certain deductions from pay which will not affect the worker’s national minimum wage pay, for example- deductions to meet the charge for a Criminal Records Bureau check (NMWM11090), sums owed to third parties by the worker (NMWM11180).

However, if the employer also deducts an administration charge or fee for handling the transaction on behalf of the worker, then the amount of the administrative charge or fee will always reduce the worker’s national minimum wage pay, since it is made for the use and benefit of the employer (NMWM11020). This applies even where they are legally entitled to make the charge (such as where there is an attachment of earnings order).

If the employer uses an umbrella company, any administrative charge imposed on the employer by the umbrella company is the liability of the employer. Any deduction to the worker’s pay in regard to the charge imposed by the umbrella company will also reduce the worker’s national minimum wage pay.

However, if the worker freely chooses to make a payment to the employer for handling a transaction for the worker, that payment will not reduce the worker’s national minimum wage pay unless the payment is a contractual or other requirement imposed on the worker by the employer.

For general advice on how deductions and payments from workers can affect their national minimum wage pay, See NMWM11020 and NMWM11030.

For advice on the effect of work related fees, registrations and licenses, see NMWM11230.