6 National Minimum Wage Traps


The national minimum wage (NMW) is the minimum hourly pay that almost all workers are entitled to by law. However, your company may be inadvertently not paying your employees the NMW. Here is a list of six common ways in which your company may be failing to comply:

  1. Unpaid interns: While the use of unpaid interns may be a common practice in some industries, it is not always legal. Only organisations with a specific exemption, such as charities, can have unpaid workers.
  2. Workers mislabelled as ‘self-employed’: Mislabelling self-employed workers can be costly, as they are not entitled to the NMW. As an employer, it is important to pay close attention to the proper legal status of workers to avoid any issues.
  3. Benefit in kind and deductions: An employer may make deductions from a worker’s pay in order to cover the cost of items necessary for the position, but the NMW will be reduced as a result. If deductions are made, ensure that workers still receive the NMW.
  4. Overtime: During periods of increased working hours, worker hours must be closely monitored to ensure that workers are paid the correct overtime rate.
  5. Commission: For employers that rely on commission payments to fulfil the NMW requirements, they must verify that their workers’ pay reflects the correct amount.
  6. Salary sacrifice: Some alterations to an employment contract can inadvertently reduce basic pay below the NMW. If employment contracts are adjusted, ensure that the NMW remains intact.

As the NMW generally rises each year in October, worker wages must be adjusted to accommodate that change. Contact Bollington Insurance Brokers to learn how you can remain compliant.