Common UK National Minimum Wage Mistakes Employers Make When Calculating the UK National Minimum Wage

Paying employees correctly isn’t just a matter of fairness, it’s the law. Yet, many UK employers, both large and small, inadvertently slip up when calculating the National Minimum Wage (NMW). What happens if you fail to comply with National Minimum Wage? Mistakes are costly in more ways than one; repayments to the affected staff, plus hefty fines are the physical penalties, but the harm to your employees’ morale and wider reputational damage from being ‘named and shamed’ on public lists can be catastrophic. The Government released its latest list in October 2025, with some well-known brands appearing once again. So, what are the National Minimum Wage regulations? Let’s break down the most common pitfalls and how to avoid them.

1. Deductions and Payments from Workers

One of the most frequent mistakes is deducting money from workers in ways that bring their pay below the minimum wage. This can happen in two main scenarios:

Job-related deductions: If you deduct costs for tools, uniforms, or expenses tied to the job, this can unlawfully reduce a worker’s NMW entitlement. Employers need to be cautious as any deductions must not bring wages below the legal minimum.

Deductions to rectify overpayments: A Direct Earnings Attachment may be required if an employee owes money to the DWP, for example due to overpaid benefits. Employers must ensure these deductions do not breach minimum wage rules.

2. Failing to Pay for All Time Worked

Employees are entitled to the NMW for all time they are working or required to be available for work, even if nothing is actively assigned. Example situations are:

• Shift overruns and handovers: Time spent at the start or end of shifts, including team handovers, must be paid.
• Security checks and site entry/exit: Passing through security or clocking in/out is counted as working time.
• Travelling and training: Time spent travelling for work or in mandatory training also qualifies for NMW.
• Sleep-in shifts: Workers on sleep-in shifts must receive sufficient pay for the hours they are at the workplace, even if asleep.

Neglecting these periods is a common way minimum wage underpayments occur.

3. Misapplying Accommodation Offsets

If you provide living accommodation to staff, there’s a specific accommodation offset you can apply to their wages. The mistake comes when employers:

• Deduct too much, leaving wages below the NMW.
• Apply it incorrectly without verifying the legal maximum offset.

Accurate calculation is essential to stay compliant; our managed payroll team can provide assistance and one-off consultancy to assist with getting it correct in your payroll system.

4. Apprentices: Age and Genuine Status Matter

Apprenticeship rates can be tricky. Common errors include:

• Paying the apprentice rate to someone who isn’t a genuine apprentice.
• Paying the apprentice rate before or after the apprenticeship.
• Continuing the lower apprentice rate for apprentices aged 19 or older after their first year.
• Failing to pay for time spent training or studying as part of the apprenticeship.

Getting these details wrong is one of the most frequent pitfalls for employers of young or apprentice staff.

5. Ignoring Rate Changes

Do you know when the National Minimum Wage changes? Like other statutory payments, NMW rates change every year on 1 April, with the new rate published a few months in advance, so there’s no excuses for failing to update your payments.

But that is not the only time the NMW rate changes. Employers also sometimes apply the wrong rate when employees move between age bands (18, 21, 23+), and this of course can happen any day of the year, so requires vigilance.

6. Misclassifying Workers and Work Hours

Different types of workers have different rules for National Minimum Wage:

• Salaried hours workers: Extra hours beyond contracted ones may not be properly compensated.
• Time, output, and unmeasured work: Confusing these types can lead to paying below the NMW.
• Interns, work experience, and trial periods: Some employers mistakenly think these roles don’t require minimum wage, but many participants are entitled to be paid.

Accurately identifying worker type and calculating pay accordingly is crucial.

Bottom Line

Paying the National Minimum Wage isn’t as simple as paying a set amount per hour, it’s a complex and evolving compliance challenge. From deductions and shift overruns to apprenticeship pay and worker classification, the areas for error are numerous, particularly for employers in sectors such as hospitality, healthcare and early years education where shift work and irregular hours are common.

It’s important to note that this is not a complete National Minimum Wage calculator for employers. The Government have created this NMW knowledge base, or you could also download our comprehensive National Minimum Wage compliance PDF guide for more complete guidance, or better yet, contact our payroll team for personal advice and National Minimum Wage audit assistance, to ensure your compliance before it’s too late.