Am I being paid the National Minimum Wage?

It might seem like an obvious question. If your contract says you’re paid more than £9.50 per hour (assuming you’re 23 or older), then your employer is complying with the law, right?

Actually, it’s not always that straight forward and we see a lot of people coming to our service who have workplace expenses which their employer doesn’t pay for, or are asked to do additional work which their employer does not include when calculating their hours.

For example, you might:

• Drive as part of your job and pay for your own fuel
• Spend half an hour setting up a shop each morning without being paid
• Drive between jobs but only get paid for time spent with clients, but not for the time you spend driving

All of these situations — and plenty of others — can affect your real rate of pay. If your pay falls under the National Minimum Wage after accounting for these adjustments, your employer is breaking the law.

It’s likely you aren’t being paid properly if you’re contract says you’re paid the National Minimum Wage — or close to it — and you either:

• Work extra hours without being paid, or
• Pay for petrol, materials, or equipment to do your job

Not only might you be paid less than National Minimum wage, these costs should be deducted from your net earnings, meaning you should pay less tax and be entitled to more money if you are claiming a means-tested benefit.

Photo by Karolina Grabowska from Pexels

How do I calculate my real hourly rate?

1. Look at your pay slip and find your income before you pay tax, national insurance, student loan repayments or any other deductions. If you are paid a salary — for example, £25,000 per year — divide the figure by 52 to get your weekly pay.
2. Deduct any work-related expenses from your total pay — such as petrol, if your job involves driving — but only if your employer doesn’t pay you back to cover these expenses. Do not deduct travel costs for getting to and from your place of work, as these cannot be counted as workplace expenses.
3. Add together all the hours you have worked in the pay period the income relates to. So, if you are looking at your weekly income, figure out how many hours you work in a week. You can check what counts as working hours by following the link at the end of this section.
4. Divide your pay after you have deducted expenses by the number of hours you worked.
5. If this is below the National Minimum Wage for your age, your employer is breaking the law and not paying you enough. You can check the current NMW in the link below.

So, if you worked 35 hours and were paid £350; 350 divided by 35 is 10, so your hourly rate would be £10 per hour.

However, if you paid for £50 of petrol each week, and your employer did not reimburse those costs, your weekly pay would be £350 — £50 = £300; £300 divided by 35 is £8.57.

In this case, if you are 21 or older, your employer would be paying you less than the National Minimum Wage.

National Minimum Wage and National Living Wage rates

Maximum weekly working hours

Can my employer get around these rules?

Generally, the rules apply to everyone and your employer cannot refuse to pay National Minimum Wage. A contract term giving your employer permission to pay less than the national minimum wage would be invalid and if you have been paid less than National Minimum Wage in the past, your employer would be expected to backdate those payments to bring you up to the legal minimum.

The most common way an employer might get around the rules is to say you are self-employed, even though the relationship is more like one of employment. This is because self-employed workers have fewer rights than employees. When an employer says you are self-employed, even though you are actually an employee, this is known as bogus self-employment.

You can find out more about bogus self-employment and why it is a problem here, or follow the link below for some of the strangest excuses employers have given for not paying the minimum wage.

See the link at the bottom of this section for a tool that works out your employment status for tax purposes.

HMRC reveals absurd excuses for not paying National Minimum Wage

Check employment status for tax

Does this affect my Universal Credit?

You might be entitled to more Universal Credit than you’re currently paid.

Many work-related expenses you pay that aren’t reimbursed by your employer can be used to reduce the earned income deducted from your Universal Credit, Working Tax Credit or other means-tested benefits. Your benefit would increase as result.

If you’re unsure about how this rule applies, get in touch with Citizens Advice. We can check if the rule applies in your circumstances and help you ask for it to be applied if it isn’t already.

I think my pay is wrong, what should I do?

When dealing with an employment issue, we would always recommend speaking to an advisor first, especially if you still work for the employer and are worried about maintaining a good ongoing relationship. Citizens Advice’s website has more information on dealing with this issue by yourself.

Problems getting paid

However, our advisers can help if you need more support. You can contact our HMRC team by requesting a call back here:

HMRC Project Registration Form

We can help you calculate your hourly rate, figure out whether expense can be deducted to reduce your income, check you’re getting the right benefits, and give you advice on negotiating with your employers.

Disclaimer: This information was correct at the time of publishing on 31 October 2021 and is provided as a guide only. It is not a recommendation to take a specific action and we suggest you speak to an adviser if you have any doubt about how the law applies to you.