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How to check your pay

Your average hourly pay has to be at least the NMW, worked out over a period called the ‘pay reference period’.

To find out whether you are getting the NMW you need to be aware of what can counts towards it and what doesn’t. You also need to know which hours you are entitled to be paid for – this depends on which of the four types of work under the NMW rules you are doing:

• time work
• salaried hours
• piece or output work
• unmeasured work

• Calculating the National Minimum Wage: time work or salaried hours
• Calculating the National Minimum Wage: output (piece) work
• Calculating the National Minimum Wage: unmeasured work

The pay reference period

This is usually the period of time that you are actually paid for. So if you are paid weekly your pay reference period is one week, while if you are paid monthly it is one month. You must be paid, on average, at least the NMW during each pay reference period.

Under the NMW rules, the pay reference period cannot be longer than a month. Even if your employer pays you at longer intervals (eg once a quarter) you must still get the NMW on average each month during that quarter.

When working out whether you are getting the NMW, the pay that counts may not just be the pay you receive during the pay reference period. It also includes pay which you earn during that period, but don’t receive until the next one. For example, if you are paid monthly and do some overtime near the end of July, but aren’t paid for it until August, it counts towards your July pay.

Pay that counts towards the NMW

The pay you receive that can be used to calculate the NMW is known as your NMW pay.

NMW pay is calculated on gross pay (before tax and National Insurance have been taken off). As well as the basic pay you get for the work you have done, your gross pay can include other kinds of payment which count towards the NMW:

• sales commission, performance-related pay or other payments based on how well you do your job
• tips, as long as they are paid through the payroll

A number of payments don’t count towards NMW pay and you should deduct them from your total pay before working out whether you are getting the NMW. Payments which don’t count include:

• loans
• advances of wages
• pension payments
• retirement lump sums
• redundancy payments
• rewards under staff suggestion schemes
• any premium element (in other words, anything you are paid on top of your basic pay) for working at special times, eg overtime, bank holiday rate
• allowances on top of your basic pay, for example for working unsocial hours, in a particular area (eg London Weighting), in dangerous conditions, ‘on call’, or performing special duties over and above your normal ones

Deductions and payments which do not reduce NMW pay

Some deductions from pay, or payments you make to your employer, are ignored in working out NMW pay. So if you are paid (for instance) £5.73 an hour and deductions or payments for any of the reasons listed below reduce this to £4, the question is whether £5.73 an hour, not £4, meets the NMW in your case.

Deductions and payments which do not reduce NMW pay are:

• penalties for misconduct – as long as these penalties are in your contract
• paying back an advance of wages
• paying back an accidental overpayment of wages
• the costs of any shares or securities which you have chosen to buy in your firm
• money you choose to have deducted from your pay, like a pension contribution or union subscription – as long as the deduction isn’t required as part of your work and doesn’t go into your employer’s pocket
• payments you choose to make to your employer to buy goods or services from him – for instance, if you spend some of your wages on meals in the staff canteen

Deductions and payments which reduce NMW pay

Some deductions from pay, or payments you make to your employer, are taken into account in working out NMW pay. So if you are paid (for instance) £7 an hour and deductions or payments for any of the reasons listed below reduce this to £5, the question is whether £5 an hour, not £7, meets the NMW in your case.

Deductions and payments which reduce NMW pay are:

• refund of money spent by you in connection with your work such as the cost of purchasing tools or uniform
• refund of expenses incurred while in the course of doing your job such as travel
• deductions to cover the cost of items your employer has supplied to you that are necessary for your job such as tools or uniform
• deductions for your employer’s own use and benefit such as meals in the staff canteen or transport to and from work that they provide
  

• Pay

Do ‘benefits in kind’ count towards the NMW?

Benefits in kind are anything your employer provides for your benefit apart from pay. There is nothing to stop employers offering you benefits in kind, but except for an amount for accommodation, an equivalent value in money can’t be counted towards NMW pay.

Examples of benefits in kind which don’t count towards NMW pay are:

• meals
• fuel
• a car
• your employer’s contribution to your pension fund
• help with removals
• medical insurance
• luncheon vouchers
• child care vouchers

Accommodation

If your employer provides you with accommodation, they can count some of its value towards NMW pay.

• Calculating the National Minimum Wage: when your employer provides accommodation

Where to get help

The Pay and Work Rights helpline gives confidential help and advice on the National Minimum Wage in over 100 languages. If you aren’t being paid the NMW you can also make a complaint to the Pay and Work Rights helpline.

• Pay and Work Rights helpline contact details