The National Minimum Wage (“NMW”) is crucial in protecting workers from exploitation and ensuring they are receiving fair compensation for their work. In the healthcare sector, where a large proportion of the workforce consists of lower-paid staff such as care assistants, cleaners and support workers, the importance of the NMW is particularly prevalent in safeguarding these worker’s livelihoods.
The NMW is set every April by the government in line with the recommendations of Low Pay Commission, whose goal is to increase living standards across the UK.
The current rates since 1 April 2025 are:
So why is it that employers – from small businesses to large corporations continue to fall foul of NMW requirements each year and what common pitfalls should employers within the healthcare sector be cautious of?
So how do we calculate a calculate a worker’s hourly rate?
It is first necessary to establish the worker’s “pay reference period”. A pay reference period is how often a worker is paid (i.e. monthly, bi-weekly or weekly) and cannot be longer than 31 days. Only pay received during that pay reference period will count towards the calculation of NMW.
Examples of types of pay which will count towards the calculation of a worker’s hourly wage include:
However, there are a number of types of pay which will not count towards the calculation of a worker’s hourly wage and these include:
Under NMW legislation, if a worker is required to purchase any clothing or equipment (such as a staff uniform) in connection with their role, the cost of this purchase should be deducted from the worker’s salary. This principle also applies where the employer has deducted the value of the items from the workers’ salary.
Although there is no strict definition of a “staff uniform”, there have been a number of high-profile employers who have fallen foul of this requirement for a wide variety of reasons, for example:
A large proportion of workers within the healthcare sector will be required to wear a uniform. Employers should therefore be alert to any costs which are being incurred by its workers in complying with a uniform policy, particularly where the worker is earning NMW and any costs could reduce their hourly wage to below NMW.
Employers may therefore want to consider altering their uniform policies to mitigate the risk of a NMW breach including: (1) providing uniforms to staff; and (2) paying workers an allowance to cover the purchase of any uniform.
The accommodation offset is the only benefit in kind which counts towards the calculation of a worker’s hourly wage for NMW purposes. The daily accommodation offset rate since April 2025 is £10.66.
The accommodation offset applies whenever accommodation is provided to a worker by an employer, including situations where:
In these circumstances, the employer would be able to offset the accommodation offset against the cost of providing the accommodation. It is likely in the healthcare sector, given the prevalence of live-in carers and healthcare assistants residing in residential homes that accommodation is provided as part of their role.
Where the accommodation offset applies, its effect on NMW will depend upon whether:
It is essential that where employers are providing accommodation to their workers, they take into account the effect of both the charges for the accommodation and the accommodation offset in relation to the worker’s NMW pay. It is also important for employers to be aware that charges for utilities will be included in calculating the total cost of the accommodation.
In order to accurately calculate a worker’s hourly pay, the employer must have accurate records highlighting the exact number of hours worked by the worker in the pay reference period.
In the healthcare sector, where workers are regularly working long hours on shift patterns and deal with staff shortages, it is essential that employers have in place systems which accurately analyse the hours being worked by their workers and potential issues could arise in the following situations:
The above examples highlight potential circumstances where a worker is working additional hours during a pay reference period but may not be receiving a salary for each hour worked.This may ultimately have the effect of reducing the worker’s NMW pay below the threshold, as they have essentially worked hours for free.
Although many workers within the healthcare sector will go above and beyond to provide care to their patients, it is essential that employers are alive to these issues which could make them liable to HMRC for breach of NMW legislation.
Now to the scary bit - what are the consequences if you fail to comply with NMW legislation?
The penalties for failure to comply with NMW legislation can be severe and include:
In addition, where the total arrears owed to workers is more than £500, HMRC will consider whether to “name and shame” the employer.
NMW is a highly complex area and as shown by the penalties above, the ramifications for failing to comply with NMW legislation (whether the employer has acted intentionally in breaching or not) can be devastating both financially and reputationally with several care providers being named in these lists over recent years, emphasising the need for employers within the sector to remain vigilant.
If you have any questions in relation to your compliance with NMW, please contact a member of the team here.
The information on this site about legal matters is provided as a general guide only. Although we try to ensure that all of the information on this site is accurate and up to date, this cannot be guaranteed. The information on this site should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.
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