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Most employees, with very limited exceptions, must be paid the National Minimum Wage (NMW) or the National Living Wage (NLW). These hourly rates vary according to the age of the worker, so it’s crucial to keep a sharp eye on the birthdays of your younger workers to ensure they are paid at the right rate for their age band.

The second trap you can fall into is to ignore some of the hours worked. All overtime hours, time spent training, or standing in line for security checks, must be counted. Workers who undertake sleep-in shifts must be paid the NMW for the whole shift.

All the NMW rates will increase for the first pay period that begins on or after 1 April 2019, and it is important to get these pay calculations exactly right. Tips and gratuities can never be counted towards the NMW paid.

If you underpay by £100 or more across your whole payroll, HMRC can include your details on a list of employers in default, which is published quarterly.

The penalty for failing to pay the correct amount of NMW can be up to £20,000 per employee.

Action Point!
Are you certain your NMW calculations are correct?

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Clarke Nicklin House, Brooks Drive, Cheadle Royal Business Park, Cheadle, Cheshire, SK8 3TD. Registered Number OC309225.
The firm is registered to carry on audit work in the UK & Ireland. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001178544. The professional rules applicable are the Audit Regulations and Guidance which can be found at www.icaew.com/regulations, and the International Standards on Auditing (UK and Ireland) which can be found at www.frc.org.uk/apb/publications/isa.cfm.