Almost all workers are entitled to be paid at least the National Minimum Wage (NMW). To check if you are being paid the NMW rate you need to know your pay reference period and what elements of pay count towards the NMW.
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:
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.
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:
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:
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:
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:
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:
If your employer provides you with accommodation, they can count some of its value towards NMW pay.
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.