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HMRC are currently putting a lot of time and effort into targeting minimum wage errors so it is worth ensuring you are paying the minimum wage correctly.

Industries which often have an issue with the minimum wage are:

• Retail
• Food and drink outlets
• Hairdressers
• Care homes
• Nurseries

Common errors

1/ Using the wrong rate

Are you paying the correct rate?  Have you failed to implement the annual rate increase? Have you missed a worker’s key birthday as they move from one band to another, or failed to apply the apprentice rate correctly?  Current minimum wage rates can be found here.

2/ Deductions

Are you making deductions from pay that take a worker’s pay below NMW/NLW rates?  E.g. If you deduct the cost of a uniform from a member of staff’s wage, this could take them below the NMW.

3/ Additional pay

Are you including top ups to pay that do not count as pay for NMW/NLW purposes? E.g. shift allowances in some circumstances or customer tips or bonuses.

4/ Status of the worker

Are you engaging people who should be classed as workers? E.g. are you mistakenly treating workers as volunteers, interns or self employed?

See “Who gets the minimum wage” to help you decide if an employee should be classed as a worker and therefore be entitled to NMW.

5/ Working time

Are you including all the time a worker is working?  If not you run the risk of unpaid working time where additional hours are worked but not paid.  This could be short but regular period of time (such as helping shut up shop or clearing security at the end of a shift) or longer periods (such as training or “down time”).  Other errors can occur with travel time between assignments and sleeping time.

Some examples of recent cases highlighted by HMRC

• Nurseries: staff have base hours but may also stay late for parent’s evening or training.  Need to ensure staff are paid for this additional time.
• Care homes: sleeping in must be paid at NMW as staff are not free to leave

With so many ways of getting the NMW incorrect it may be worth paying over the NMW to cover any of these potential errors and to keep your employees happy.

If you have any questions on this article and how it affects you and your business, please get in touch here.

JLA Accounting Limited takes every care in preparing material to ensure that the content is accurate and up to date. However, no responsibility for loss for anyone acting from or refraining from acting as a result of this information can be accepted by JLA Accounting Limited.