Are Your Employees Paid The Minimum Wage For All Hours Worked?
Employees must be paid the minimum wage for all the hours they work, and while you may think you pay the right amount, it is important to check you have paid everything due.
The basic calculation to determine you have met your obligations in relation to the National Minimum Wage (NMW) can be done by dividing total pay by the number of hours worked in the reference period – which could be a week or a month – and the amount paid per hour must be at least the NMW. The levels for the NMW currently are £12.21 an hour for those over 21, £10 an hour for those 18 to 20, and £7.55 for those aged 16 to 17 and apprentices.
From April 2026, these rise to £12.71 an hour for anyone aged 21 or above, £10.85 for anyone aged 18 to 20, and £8 an hour for those aged 16 and 17 or apprentices.
When calculating if your staff have received the NMW for all their hours, you need to consider every extra hour they may have worked, which is where the calculation can become more complex.
How do you identify all hours worked?
This may seem simple to answer, but there are times when you may not realise that employees should be paid for additional time they have worked.
For example, any time they have stayed late to finish a piece of work, even if they volunteered to do so, still counts towards their hours. If they open or close the office or other commercial premises in the morning or evening, that time counts towards their work hours. So does training, if they’re required to do it, and any other time they are on site and required to work.
You can’t exempt yourself from paying for these hours by thinking ‘they’re salaried’, or ‘they volunteered to do it’. No matter why they are at work for longer than the hours they are expected to be, they must be paid the NMW for all of them.
Calculating that all hours are paid at the NMW
To make sure each person’s pay is at the right level, you need to consider the employee’s basic pay, any bonuses they may have been paid over and above their basic pay – although some are excluded from the calculation which your accountant can tell you more about – and any commission they may have been paid.
You don’t need to include overtime paid at a premium rate, such as time and a half or double time at Christmas or Easter, for example. You also don’t include expenses, benefits-in-kind, or tips, unless they are paid through payroll. But there are conditions to be aware of, so it would be best to speak to your accountant to make sure you’re including everything you should, and excluding anything that doesn’t need to be considered.
Once you have all this information, you can do the calculation to determine that all the hours worked have been paid at the NMW or above. But employers can be caught out if an employee is paid, say, a £100 day rate, and they work a 12-hour day. Or they are salaried to work 40 hours a week, but end up doing 50 hours overall. It isn’t always a simple calculation. So, if you need assistance, please speak to your accountant for advice to ensure you’re complying with all relevant regulations around the NMW.
We can help you
If you are unsure about how to do these calculations, or simply want reassurance that you’re doing everything right, then please contact us and we will do everything we can to assist you.
