National Minimum and Living Wage
Most workers entitled to a minimum wage by law. If you employ a personal assistant, you may have to ensure you pay them at least the National Minimum Wage (NMW) or National Living Wage (NLW).
The rules can be complicated. This section gives a basic overview of the NMW and NLW rules.
Employing a PA on an hourly basis
What if my PA lives with me?
Around the clock care
Other complex areas
Your obligations under the minimum wage regulations depend on the arrangement you have with your personal assistant.
If your personal assistant is 1) a family member living in your home or 2) is a non-family member who lives with you as part of your family, sharing housework and leisure activities with your family, then you may not need to pay the NMW or NLW. However, it is unlikely (although not impossible) that a personal assistant would fall into the first category because direct payments cannot usually be used to employ a close relative who lives in the same household as the person receiving care. In the case of the second category, all the facts and circumstances would need to be considered.
The rest of this section is for you if this exemption does not apply.
Almost all employees and ‘workers’ in the UK are entitled to receive the NMW or NLW – this includes full and part-time employees, agency workers, migrant workers and casual workers. (A ‘worker’ is someone who basically undertakes to do or perform personally any work or services for another person – see more on our website.)
You should note that if your PA is self-employed for tax purposes they may still be entitled to the NMW or NLW if they have to do the work themselves and cannot send someone else to do it for them, as this would mean that they fall in the definition of a ‘worker’ for NMW/NLW purposes.
If they are self-employed for tax purposes and are able to not turn up and not do the work themselves (they can send someone else to do the work for them), then they will probably not be covered by the minimum wage legislation.
The minimum wage rate depends on a worker’s age and if they are an apprentice.
The National Living Wage (NLW) applies from 1 April 2016. It means workers aged 25 and over (and not in the first year of an apprenticeship) should now receive a minimum of £7.20 per hour. The National Minimum Wage (NMW) rates will still apply to workers under 25 and apprentices.
From October 2015 the National Minimum Wage (NMW) hourly rate, if you are aged 21-24, is £6.70; aged 18 to 20, £5.30 and aged 16 or 17, £3.87. The rate for an apprentice, who is either under 19 or 19 or over and in the first year of their apprenticeship, is £3.30.
From October 2016 there will be:
- a 3.7% increase in the rate for 21 to 24 year olds (from £6.70 to £6.95 per hour)
- a 4.7% increase in the rate for 18 to 20 year olds (from £5.30 to £5.55 per hour)
- a 3.4% increase in the rate for 16 to 17 year olds (from £3.87 to £4.00 per hour)
- a 3.0% increase in the rate for apprentices (from £3.30 to £3.40 per hour)
The rate that applies depends on their age at the start of a pay period. For example, if you pay a worker weekly, at age 20 a worker is entitled to the 18 to 20 years old rate. From the first pay week starting on or after their 21st birthday, they become entitled to the 21 to 24 years old rate. If you pay them for a week ending on a Friday and their birthday is on the following Wednesday - they will be entitled to the 21 to 24 years old rate from the Saturday after their birthday.
The rates usually change annually. The government will align the National Minimum Wage and National Living Wage cycles so that both rates are amended in April each year. This will take effect from April 2017.
It is important to remember that you must pay at least the appropriate minimum wage – you can pay more.
The NMW rules are straightforward where you employ someone on an hourly basis for a set number of hours each week. The rules are more complex where a personal assistant lives with you or provides around the clock care.
Your personal assistant may well be employed by you on an hourly basis, in which case the amount they are paid at the end of a week say, or a month, will be worked out according to the number of hours they work.
Alan works 25 hours for you in a week. He is 28 and is eligible for the rate of £7.20. This means he must be paid at least £180 for that week’s work (£7.20 multiplied by 25).
You should note that you do not need to pay employees minimum wage for their lunch breaks or for their travel time to and from work (although you should ensure they are paid it once any travel time they do as part of their job, e.g. driving to pick up a prescription for you, is factored in – see below for more on this). See our employment law section for more information on rest breaks and working time rules.
If your personal assistant is paid an annual salary, then GOV.UK contains information about how to work out if NMW is being paid.
On GOV.UK there is also a calculator that you can use to check if you are paying the minimum wage.
It may be essential that your personal assistant lives with you, particularly when providing 24-hour care.
If accommodation is provided by you as part of the job (including things like electricity, laundry costs etc.), some of its value can be counted towards NMW or NLW pay. You cannot count more than the accommodation offset rate which is in force at any given time.
The maximum offset rate for accommodation (from October 2015) is £5.35 a day or £37.45 a week.
If the accommodation is free, the offset rate is added to the worker’s pay.
John, 27, is your carer, and you pay him £6.50 per hour for 30 hours work a week, which totals £195. You also give him free accommodation 7 days a week, which the law says is worth a notional amount of £37.45. This means John has earned the equivalent of £232.45 (£195 plus £37.45). If we divide this by the number of hours John has worked (30) this brings John’s pay up to £7.74 an hour which is above the minimum wage rate of £7.20.
So, if you want to employ someone for 35 hours work a week and accommodation comes with the job, you could pay them £6.13 per hour and still comply with the National Minimum Wage rules. This is because, the value of the accommodation per week is deemed to be £37.45, which counts towards the National Minimum Wage/National Living Wage. This essentially adds £1.07p (£37.45 divided by 35 hours) per hour to the worker’s wages, which brings the hourly rate up to £7.20.
No similar adjustments for NMW/NLW purposes can be made for any meals/refreshments or other benefits that are provided by you.
If you charge more than the accommodation offset, the difference is taken off your workers pay which counts towards the NMW or NLW.
Winn, who is 23 years old, is paid £7 an hour for 40 hours work (£280 per week). But he stays in the employer’s accommodation and the employer charges him £85 per week for his bed and board. Under the accommodation offset rules, the employer is allowed to consider £37.45 per week as pay for NMW purposes. So whilst Winn actually only receives £195 (£280-£85), he is deemed to receive £232.45 (£195+£37.45). However, the deemed amount of wages is less than the National Minimum Wage for his 40 hours work, as it only amounts to £5.81 an hour.
If the accommodation charge is at or below the offset rate, it doesn’t have an effect on the worker’s pay.
From October 2016 there will be a 12.1% increase in the accommodation offset (from £5.35 to £6.00 a day).
You can find more information on the accommodation offset rules on GOV.UK.
Please see our benefits and expenses section for information about the tax treatment of any live-in accommodation.
If your personal assistant provides you with 24-hour support, then things can get a little complicated when thinking about how to treat ‘sleeping time’ and ‘down time’ for the purposes of the NMW. Clearly, it would not be reasonable for your carer to expect to be paid 24 hours x NMW when some of the time they are reading a book or sleeping!
The typical way of dealing with this, is to make an agreement between the two of you as to the amount of actual care work that can be reasonably expected in any 24-hour period. A common expectation is around ten hours. For example, it may be specified that nine are during waking hours and that one is in case of night calls. Pay for the 24-hour period would then be based on 10 hours x £7.20 = £72.00. Sometimes the working hours may be more, sometimes less, but overall – the 10 hours should be representative.
An agreement signed by both you and the worker should be kept as evidence of the arrangements. A reassessment may be needed where working time regularly exceeds expectations – if 11 hours work per 24 hours becomes the norm, rather than 10, then the worker’s pay in the example above may need to raise to £79.20.
If there is no such agreement then the default position is that the employee should get paid for the actual hours they are ‘working’ in the ordinary, natural meaning of the word.. You will have to keep very detailed records to be able to work this out, especially if your PA gets up several times during the night to assist you.
You can find out more about this on GOV.UK here.
It can be quite difficult to understand and apply the NMW and NLW rules to some situations that you might come across with your personal assistant. Here we give you some tips on dealing with different scenarios that can sometimes cause difficulty, as highlighted in this HMRC report on the minimum wage for carers, and tell you where to go for further information:
You should be careful about making deductions from your personal assistant’s pay in respect of items or expenses that you have provided that are necessary for their employment (such as for a uniform) as these cannot bring down the pay rate below the NMW or NLW.
Example: Worker A (over 25) is paid £8 an hour for 40 hours per week. The worker has earned £320 but then a deduction of £55 is made for a uniform that he has been given, so he only received £265 or the equivalent of £6.62 an hour, which is below the NLW.
You can find confirmation of this on GOV.UK.
Travel time and costs
You should make sure that your personal assistants are paid at least the NMW or NLW rate for all hours worked, including travel time (which means travelling in connection with work, e.g. driving into town to pick up a prescription for you, but not travelling from their home to place of work) - and associated out of pocket expenses such as vehicle mileage.
Example: Worker B (aged 24) is paid weekly. Last week she was paid £6.70 for 30 hours work which makes £201 in total. However the worker spent 45 minutes driving the employer to the doctor and back, so the minimum amount to be paid to the worker should be £6.70 x 30 hours, 45 minutes = £206.02. Worker B has been paid below the NMW.
Differing pay rates
You should make sure that the employee’s basic rate of pay meets the relevant minimum wage. You may pay them an inflated rate for working on a Sunday for example, but can’t use this to disguise a low rate for the rest of the week.
Example: Worker C (aged 19) is paid weekly. Last week she was paid £207.90 for 31 and half hours work, which averages £6.60 an hour. On the face of it, £6.60 per hour looks like it meets the applicable minimum wage, but actually, 8 of the hours were paid at £12 for a Sunday shift, which means that the wages in respect of the other ‘normal’ 23.5 hours were only £111.90. This is a problem as £4.76 per hour (£111.90 divided by 23.5) is below the NMW.
Where workers undergo training (for example – employment induction or skills development) the time spent on such activities is working time for minimum wage purposes where a contract of employment has started or where it is a contractual requirement for the worker to attend the training. So, if you pay £80 for your worker (aged over 25) to attend an 8 hour long food safety/hygiene course (you want to be confident in their cooking ability when they are preparing meals for you!), then you would also have to pay them at least £57.60 (£7.20 x 8) for their wages for the day on top of the cost of the course.
You can see what other things count as working time on GOV.UK.
Further guidance on the NMW and NLW is to be found on GOV.UK.
There is a comprehensive employer guide to calculating the NMW and NLW produced by the Department for Business, Innovation and Skills that you may find helpful as it covers complex topics like sleeping between duties and accommodation.
If there is any uncertainty for you at all about the NMW or NLW, we advise that you contact the ACAS Pay and Work Rights helpline on 0300 123 1100 (Monday to Friday 8am to 8pm and Saturday 9am to 1pm) for further advice.
By law you have to keep records to show that you are paying your employee the minimum wage and most people rely on their payroll records to do this. Such records have to be kept for three years.
A few employers try and sidestep the minimum wage rules, by doing things like paying cash-in-hand so that hours and wages go unrecorded and forcing workers to say they are self-employed. However, you should know that it is a criminal offence for employers not to pay someone the National Minimum Wage or National Living Wage (this is the case even if your worker is willing to accept it) or to falsify payment records.
You can read more about the consequences for employers of not paying the minimum wage on GOV.UK.