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Ensuring NMW compliance: A key priority for employers

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Compliance with the NMW (National Minimum Wage) and NLW (National Living Wage) is not just a legal requirement, it is an essential part of responsible business practice. Ensuring your workers are paid correctly helps you avoid financial penalties, reputational damage, and operational disruption, while also supporting a fair and productive workplace.

 

Current rates

As of 1 April 2026, the NLW is £12.71 per hour for workers aged 21 and over. The NMW is £10.85 for 18–20-year-olds, and £8.00 for 16–17-year-olds and apprentices. You should check the current rate at the time of recruitment, particularly where birthdays or apprenticeship status may affect pay.


While these headline rates may seem straightforward, compliance can be more complex in practice. You must ensure that pay calculations meet NMW requirements after factoring in working time and allowable deductions. For example, unpaid working time (such as training, travel between assignments, or time spent opening or closing premises) can reduce the effective hourly rate if not properly accounted for.

 

Areas of risk

A common area of risk is the accommodation offset. Where you provide accommodation to workers, a daily offset amount set by the government can be applied. However, if you charge more than the prescribed offset, the excess will reduce the worker’s pay for NMW purposes. This can unintentionally bring pay below the legal minimum, even where the headline hourly rate appears compliant. Careful monitoring of accommodation charges and correct application of the offset is therefore essential.


Other factors you should consider include:

  • Deductions for uniforms or equipment, which may reduce pay for NMW calculations
  • Salary sacrifice arrangements, which can affect minimum wage compliance
  • Apprentice rates, particularly where an individual’s status changes during employment
  • Pay reference periods, ensuring pay is correctly aligned with hours worked.

 

Compliance

Maintaining accurate and up-to-date payroll records is also crucial. You should ensure you can clearly demonstrate compliance if required.

In recent months, there has been an increase in HMRC compliance activity, with some employers receiving letters requesting evidence of NMW compliance covering the previous six years. This reflects HMRC’s continued focus on enforcement and highlights the importance of proactively reviewing your pay practices. Even unintentional errors can lead to significant arrears, hefty penalties of up to 200% of the total underpayment, and public naming.

Remember, as from April 2027 the Fair Work Agency will take on full ownership of enforcing the NMW so now is a timely opportunity to audit your records and address any areas of risk.

 

How we can help

For more information or guidance call us on 0370 840 0234 or email us at [email protected]

 

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