Mon - Fri: 9am - 5:30pm
0113 887 8432
May 3, 2019

Tread Carefully! - National Minimum Wage Regulations

From 1 April 2019, the National Living Wage (i.e. the statutory minimum for workers aged 25 and above) was increased by 4.9% from £7.83 to £8.21 per hour. Likewise, the National Minimum Wage for younger workers and apprentices also increased above inflation.

The minimum wage was introduced in April 1999 to guarantee minimum standard for pay for workers. However, the National Minimum Wage Regulations ("NMWR") can be complex and care should be taken to ensure that your business does not unintentionally breach the rules.

In particular, additional consideration should be made where employees are required to be at their workplace before their shift starts, where staff purchase their own workwear, or where you facilitate a salary sacrifice scheme.

Minimum Wage Rates

The hourly minimum wage rates for 2018/19 are as follows:

Age/Status Minimum Hourly Wage
25 + £8.21
21 – 24 £7.70
18 – 20 £6.15
Under 18 £4.35
Apprentice £3.90

Enforcement & Penalties

Failure to comply with the minimum wage rates may result in having your details published by the Government, plus a financial penalty of 200% of the arrears you owe (minimum of £100 and maximum of £20,000 per worker).

In more serious cases, you may be criminally prosecuted and charged an unlimited fine.

Recent Examples

There have been a number of recent cases where high-profile businesses have inadvertently fallen foul of the minimum wage rules:

Additional Time Before/After Shift

Staffline, a recruitment and training company, was forced to make a provision in its accounts for estimated additional costs when underpayments were identified for employees working in a number of food production sites.

In this case, workers were not paid for time spent donning specialist hygiene clothing which was required for them to undertake their duties.

Similarly, where employees are required to go through security before and/or after their shift, this time should be taken into account when determining the time spent working for minimum wage purposes.


Restaurant chain Wagamama has also previously fallen foul of the National Mimimum Wage Regulations, this time with respect to workwear.

Wagamama required its front-of-house staff to wear black jeans or a black skirt with their branded Wagamama top.

The government considered this to be asking the staff to buy a uniform, thereby resulting in the workers' effective wage to full under the statutory minimum.

The business has since updated its uniform policy and now provides a uniform supplement to cover the required clothing.

Pay Averaging

In 2017, it was held that retailer John Lewis had breached the minimum wage rules due to the use of pay averaging (i.e. spreading the workers' pay evenly throughout the year).

Whilst the employees were paid the correct amount over the course of the year, those on hourly rates saw their pay dip below the minimum when they worked additional hours.

Salary Sacrifice

Where an employer deducts costs from workers' pay, this may result in a breach of the minimum wage legislation.

Iceland Foods operated a voluntary savings scheme whereby staff could put aside money from their wages into a separate ring-fenced account which could be withdrawn on demand (typically at Christmas). This resulted in participating staff being pushed below the statutory minimum threshold and therefore being in breach of the legislation.

Interestingly, in contrast an employment appeal tribunal found that Middlesbrough FC did not breach minimum wage legislation after deducting costs of season tickets from staff wages over several weeks at the request of its employees.

In light of these cases, HMRC published a consultation in December 2018 requesting the views of employers specifically with regard to salary sacrifice schemes, with a view to making changes where employers are unfairly penalised.

If you are unsure as to whether your businesses is complying with the NMWR and are interested in a review of your practices, please don't hesitate to get in touch with a member of our team.

Contact us today to discuss your tax requirements.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram