The rules can be complicated. This section gives a basic overview of the NMW and NLW rules and tells you where to find further information. For an overview of other rules that you may need to consider when taking on a PA, go to our dedicated employment law section.

Basic info about the NMW and NLW
NMW and NLW rates
Employing a PA on an hourly basis
What if my PA lives with me?
Around the clock care
Complex areas
      Deductions
      Travel time and costs
      Differing pay rates
      Training time
What to do if you discover a shortfall
Minimum wage compliance
Getting help with NMW/NLW

Basic info about the NMW and NLW

Your obligations under the minimum wage rules depend on the arrangement you have with your PA.

If your PA 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 PA 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. You may fall into this category if you pay a family member who lives with you from your own money. In the case of the second category, as per this HMRC guidance, all the facts and circumstances would need to be considered. 

The rest of this section is for you if these exemptions do 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 as part of someone else's business – see more on 'workers' on our website.)

It is not open to employees or ‘workers’ to opt out of the NMW or NLW.

You should note that if your PA is 'self-employed' they may still be entitled to the NMW or NLW if they fall in the definition of a ‘worker’.    

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NMW and NLW Rates

The minimum wage rate depends on a worker’s age and if they are an apprentice.

The NLW applies to workers aged 25 and over (and not in the first year of an apprenticeship). The NMW rates will still apply to workers under 25 and apprentices. While the NLW operates as a higher level of NMW for workers aged 25 or over, the same rules regarding things like compliance and penalties apply to both NMW and NLW.

From April 2019, the rates that you need to ensure you are paying are:

  • £8.21 for workers aged 25 and over (up from £7.83) – this is the NLW
  • £7.70 for 21 to 24 year olds (up from £7.38 per hour)
  • £6.15 for 18 to 20 year olds (up from £5.90 per hour)
  • £4.35 for 16 to 17 year olds (up from £4.20 per hour)
  • £3.90 for apprentices (up from £3.79 per hour). An apprentice qualifies for the lower apprentice rate of the NMW if he or she is under 19, or is still in the first year of his/her apprenticeship contract. Apprentices who are over 19 and not in the first year of an apprenticeship contract are paid at the NLW or the rate of NMW appropriate to their age.

Pay for minimum wage purposes is the gross pay before deduction of tax and National Insurance contributions (NIC), and before other deductions from pay such as employee pension contributions.

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. So, if you pay them for a week ending on a Sunday and their birthday is on the following Wednesday – they will be entitled to the 21 to 24 years old rate from the Monday after their birthday.

It is important to remember that you must pay at least the appropriate minimum wage – you can pay more.

The rates usually change on 1 April each year.

If you receive direct payments from your Local Authority, the Department of Work and Pensions or the NHS to help you pay for your PA, they should cover increases in the minimum wage in any payments they make to you. They should include additional money because higher wages to pay may also mean things like more employer NIC to pay and higher pension contribution costs.

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Employing a PA on an hourly basis

Your PA may well be employed by you on an hourly basis, in which case the amount they need to be paid at the end of a week say, or a month (whatever their pay period is) should be worked out according to the number of hours they work.

You should make sure you correctly identify the working hours of your PA in each pay period – particularly important if your PA works outside of the normal pattern – e.g. if they start early or finish late one day.

Example

Alan works 25 hours for you in a week. He is 28 and is eligible for the rate of £8.21. This means he must be paid at least £205.25 for that week’s work (£8.21 multiplied by 25).

One Tuesday, Alan starts work one hour early to help you with something, so that week you would need to make sure you pay him at least £213.46 (£8.21 multiplied by 26).

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 PA is paid an annual salary, then they are still entitled to the minimum wage so you will need to work out their equivalent hourly rate to see if they are getting the minimum wage. GOV.UK contains information about how to work this out.

On GOV.UK there is also a calculator that you can use to check if you are paying the minimum wage.

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What if my PA lives with me?

It may be essential that your PA 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 April 2019) is £7.55 a day or £52.85 a week.

If the accommodation is free, the offset rate is added to the worker’s pay.

Example

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 £52.85. This means John has earned the equivalent of £247.85 (£195 plus £52.85). If we divide this by the number of hours John has worked (30) this brings John’s pay up to £8.26 an hour, which is above the minimum wage rate of £8.21.

So, if you want to employ someone aged 25 or over for 35 hours work a week and accommodation comes with the job, you could pay them £6.70 per hour and still comply with the minimum wage rules. This is because, the value of the accommodation per week is deemed to be £52.85, which counts towards the NLW. This essentially adds £1.51 (£52.85 divided by 35 hours) per hour to the worker’s wages, which brings the hourly rate up to £8.21.

No similar adjustments 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.

Example

Winn, who is 23 years old, is paid £7.70 an hour for 40 hours work (£308 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 £52.85 per week as pay for minimum wage purposes. So whilst Winn actually only receives £223 (£308-£85), he is deemed to receive £275.85 (£223+£52.85). Nevertheless, the deemed amount of wages is less than the relevant minimum wage rate for his 40 hours work, as it only amounts to £6.89 an hour (the relevant rate is £7.70).

If the accommodation charge is at or below the offset rate, it doesn’t have an effect on the worker’s pay.

The accommodation offset rate is amended on 1 April each year.

You can find more information on the accommodation offset rules on GOV.UK and we tell you where you can help with understanding them below.

Please see our benefits and expenses section for information about the tax treatment of any live-in accommodation you provide.

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‘Around the clock’ care

If your PA provides you with 24-hour support, then things can get a little complicated when thinking about how to treat ‘sleep-in’ shifts.

The law around pay for sleep in shifts has been in a state of flux. For years, many employers only paid a flat rate (for example £20 or £30) for a sleep in shift on the basis that the worker was not ‘available’ for work and was therefore not protected by the minimum wage rules.

They were essentially relying on the National Minimum Wage (NMW) Regulations, which say “hours when a worker is ‘available’ only include hours when the worker is awake for the purposes of working, even if a worker by arrangement sleeps at or near a place of work and the employer provides suitable facilities for sleeping (Regulation 32).

However, then a spate of cases came before the Courts, which suggested there was more to it than this. Judges in these cases seemed to be saying that before getting to the question of whether the worker was ‘available’ for work (which is where the ‘exception’ for sleeping is embedded); one had to ask whether they were already actually working. If they were actually working, then you did not need to consider whether they were available for work and as such, the sleep in exception could not apply.

For a while the position was therefore that sleep in shifts were working hours and were subject to the minimum wage.

A recent Court of Appeal decision has changed the position again. Broadly, the Court of Appeal ruled that workers doing sleep in shifts (whilst they are sleeping) are ‘available for work’ rather than actually ‘working’. This means they can be covered by the sleep in exception and are only entitled to the minimum wage when they are required, because they need to undertake a specific activity, to actually be awake.

However if suitable sleeping facilities are not provided then the minimum wage must be provided for the entire shift. In addition, the position is different where workers are working and not expected to sleep for all or most of a shift, even if there are occasions when they are permitted to sleep (such as when not busy). In this case it is likely minimum wage must be paid for the whole of the shift on the basis that the worker is in effect working all of that time, including for the time spent asleep.

The government’s official guidance on sleep in shifts has been updated to take account of the Court of Appeal case and you can find some examples looking at how the rules might apply in practise in our news piece. HMRC have also developed a useful 10 minute video explaining their current approach to sleep ins.

A word of warning – it may be that this case proceeds to be considered by the Supreme Court and that the Supreme Court overturn the Court of Appeal decision and find – again – that every hour of a sleep-in should count! Do check back regularly to this website for updates.

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Other complex areas, including travel time

It can be quite difficult to understand and apply the NMW and NLW rules to some situations that you might come across with your PA. 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.

Deductions

You should be careful about making deductions from your PA'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 £8.25 an hour for 40 hours per week. The worker has earned £330 but then a deduction of £55 is made for a uniform that he has been given, so he only received £275 or the equivalent of £6.87 an hour, which is below the NLW.

You can find confirmation of this rule on GOV.UK.

You should also be aware that making an administration charge in respect of processing an employee’s attachment of earnings order can reduce their pay for minimum wage purposes.

Travel time and costs

You should make sure that your PA is 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 is 35 and is paid weekly. Last week she was paid £8.50 per hour for 30 hours work (£255). However she spent 3 unpaid hours that week travelling in connection with work, so the minimum amount to be paid to her should be £8.21 x 33 hours - £270.93. Worker B has been paid below the NLW. Her employer needs to top up her pay by at least £15.93 so that the NLW rules are met.

If Worker B also incurred £20 of travel costs for those three hours of travelling, her pay would be taken to be £235. When we compare this to the bare minimum she should have received, £270.93, she has been underpaid by £35.93.

Differing pay rates

You should make sure that your PA'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 £195 for 31 hours work, which averages £6.29 an hour. On the face of it, £6.29 per hour looks like it meets the applicable minimum wage (£6.15), but actually, 8 of the hours were paid at £7 for a Sunday shift – which is supposed to represent an 85p premium on her usual rate.

If we strip out the ‘premium’ amount she received for her Sunday shift (8 x 85p = £6.80), Worker C’s basic rate works actually works out at £6.07 which is below the minimum wage (£188.20 divided by 31).

Training time

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 PA (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 £65.68 (£8.21 x 8) for their wages for the day on top of the cost of the course (and probably more, once their travel time is factored in).

You can see what other things count as working time on GOV.UK.

HMRC have produced a bite sized presentation series aimed to help employers avoid common NMW errors, including in some of these areas. Each video is under 10 minutes long and covers a particular type of error. Find out more below.

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What to do if you discover a shortfall

If your PA has not been paid the correct minimum wage, he or she is entitled to be paid a sum representing the shortfall. If you discover the shortfall, you should make an additional payment to your PA representing the shortfall as soon as is practicable, as well as ensuring that future pay rates are set above the appropriate minimum hourly rate.

In calculating the amount to be paid to your PA in respect of the shortfall, you should use the current NMW/NLW hourly rate, even if the shortfall occurred at a time when the rates were lower. This is in recognition of loss of purchase power your PA may have suffered from the initial underpayment.

The way that you work out the amount you need to pay is by using the formula (underpayment/original rate) x current rate.

Example

You work out your PA was underpaid the minimum wage by £256 during the period May to September 2017. During this time, your PA’s minimum wage rate was £7.50. However it is now £8.21. Rather than pay your PA the £256, you must pay them £280 (that is, £256 divided by £7.50 multiplied by £8.21).

If your PA discovers the shortfall, he or she can report you to HMRC (who are responsible for compliance) and/or make a claim to the Employment Tribunal.

You should be aware that correcting a shortfall may also mean that you are required to pay additional PAYE tax/NIC to HMRC on a backdated basis and pay additional pension contributions to your employees’ scheme.

HMRC have some guidance on dealing with pay arrears for tax and NIC purposes in section 1.19 of their CWG2 booklet.

Essentially, employers should deduct PAYE tax at the rates that were in operation for the years to which the arrears are attributable and in accordance with the employee’s tax code for the year and as if the additional pay had been paid at ‘week 53’ for the year.

The NIC element is worked out differently and is calculated on the basis of the year the payment is made only: it is not related back to prior years. 

If correcting a minimum wage error means that you need to pay more pension contributions, you should speak to The Pensions Regulator or the pension scheme provider concerned for further instructions.

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Minimum wage compliance

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.

HMRC are responsible for enforcing the minimum wage. As well as reacting to individual complaints, HMRC minimum wage officers also conduct proactive risk-based enforcement – you may be interested to know that since 2014, the government has more than trebled their annual funding of NMW enforcement.

If HMRC discovers or believes there is a shortfall, it can do things like:

  • Issue a notice of underpayment requiring the employer to pay arrears;
  • Require the employer to pay of 200% of the total underpayment, or £100 (whichever is the greater), up to a maximum of £20,000 in respect of each worker identified in the notice of underpayment (the penalty is reduced by 50% if the employer complies with the notice within 14 days of its service);
  • Name and shame the employer.

The employer can appeal against any notice of underpayment if they believe that there is no underpayment or that the amount in the notice is wrong. They can also appeal against any penalty imposed by HMRC.

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 there are also a number of criminal sanctions for employers not paying someone the NMW or NLW or falsifying payment records.

You can read more about the consequences for employers of not paying the minimum wage on GOV.UK.

You can read the government’s updated guidance on its approach to enforcement of the minimum wage, including on the enforcement of sleep in shifts, on GOV.UK.

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Getting help with NMW/NLW

Basic guidance on the NMW and NLW can be found on GOV.UK. HMRC have an online course to help employers find out more about the NMW and NLW.

There is a comprehensive employer guide to calculating the NMW and NLW produced by the Department of Business, Energy and Industrial Strategy that you may find helpful as it covers complex topics like sleep in shifts 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.

Finally, HMRC have produced a series of four videos to help you check if you are paying the national minimum wage (NMW) correctly.

The videos cover:

  1. When a worker is entitled to the minimum wage
  2. Different types of work for minimum wage purposes
  3. Common underpayment errors to look out for
  4. How to put things right if you find an underpayment

HMRC have also produced a bite sized presentation series aimed to help employers avoid common NMW errors. Each video is under 10 minutes long and covers a particular type of error.

  • Interns, work placements and the NMW
  • Apprentices and the NMW
  • Payments, deductions and the NMW
  • Unpaid working time and NMW
  • Accommodation and the NMW
  • Sleep in shifts and NMW

All the videos can be found on GOV.UK.

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