There are lots of reasons why an employer might find themselves not paying the
National Minimum Wage (NMW) correctly. To help you avoid making mistakes HMRC
have drawn together a list of the most common reasons that cause underpayment.
1. Failure to apply the annual minimum wage rate increase as they go up each year
on 1 April.
2. Missed birthdays as employees turn 18, 21 or 25 years old and move from one
NMW rate to another.
3. Paying the apprentice rate to somebody who isn’t actually an apprentice.
Recognised apprentices must have an apprenticeship contract and undergo an
element of structured training.
4. Continuing to pay the apprentice rate for too long. The apprentice rate only
applies to apprentices who are under the age of 19, or if aged 19 or over within
the first year of their apprenticeship.
5. Making wage deductions for items or expenses that are connected with the job.
This could include, for example, safety clothing, uniforms, tools etc.
6. Making wage deductions that are deemed to be for the employer’s “own use or
benefit”. For example a Christmas club saving scheme. It doesn’t matter that the
worker can choose to buy into the scheme and the employer doesn’t have to make
a profit from it.
7. Charging a worker more than the stated offset rate for living accommodation,
currently £49 a week.
8. Not paying for all the time worked such as time spent travelling, training or
downtime at the employer’s disposal.
9. Not paying for additional time worked such as time spent clearing security checks
once a worker’s shift has finished.
10. Including elements of pay that don’t count towards minimum wage such as tips
and the premium element of pay associated with shift premium.
Source HMRC Employer’s Bulletin 75