What counts and doesn’t count towards National Minimum Wage?

With the impact of the increased National Minimum Wage (NMW) employers need to ensure that they fully understand their obligations before April 2025.

Here are the payments that count towards National Minimum Wage:

• Basic Salary – this is the gross salary before deductions are made
• Bonuses, Commissions, incentive payments based on performance count. Premiums for overtime or antisocial shifts don’t.
• Accommodation – for employers that offer accommodation, then the employers can count a set amount of the accommodation value towards a national minimum wage, but excessive charges are prohibited.

Things that don’t count towards National Minimum Wage:

• Benefits in Kind i.e. Non cash benefits such as meals, vouchers, pensions with the exception of accommodation offset.
• Loans and Wage advances
• Redundancy payments
• Premiums for overtime or shift work
• On call, London weighting allowance, that aren’t part of standard pay.
• Tips can’t count towards basic pay since 2009.
• Salary Sacrifice can’t count towards national minimum wage which puts most salary sacrifice schemes not in reach of those who earn on or near the NMW.

Things that reduce pay include:

• Uniform purchases that are mandatory
• Deductions that benefit the employer

Things that may be applicable that don’t benefit the employer and therefore don’t reduce pay for national minimum wage purposes:

• Pension Contributions
• Tax
• National Insurance contributions
• Enhanced DBS
• Union subscriptions
• DBS Update Service

If you have any questions about the National Minimum Wage please do give our team a call on 01527 909436.