Use the National Minimum Wage and National Living Wage calculator on GOV.UK to check if someone:
- is getting paid the National Minimum Wage or National Living Wage
- has been paid correctly in previous years
Calculating the minimum wage
On average, an employee or worker must get the minimum wage for each 'pay reference period'. This is the period of time their pay covers, for example a week or a month.
You work out the average hourly rate using:
- 'gross' pay each time someone's paid – this is the total pay before tax and National Insurance (NI) are taken out
- how many hours someone worked for that pay
Example of working out average hourly rate
Sam's paid weekly and works 40 hours a week. Their weekly salary is £500 before take is taken out. They're 24 years old and not an apprentice.
When you divide £500 by 40, their average hourly rate is £12.50. This is above the minimum wage for a worker aged 24.
What counts towards the minimum wage
The National Minimum Wage is calculated on an employee's total pay before tax and National Insurance (NI) are taken out.
Payments that count towards the minimum wage include:
- basic pay
- incentive pay – if performance related
- bonuses
- commission
Example of including a bonus when checking pay
Pat is 22 years old and not an apprentice. They're paid weekly and work 40 hours a week. Their total weekly pay is £560 before tax is taken out. This includes a £100 bonus.
You need to use £560 as the starting point to work out if they're getting the minimum wage. When you divide £560 by 40, their average hourly rate is £14. This is above the minimum wage for a worker aged 22.
What does not count towards the minimum wage
Some parts of pay do not count towards the minimum wage. This includes:
- tips and gratuities
- premium payments – for example, extra pay for working bank holidays or overtime
- a loan from an employer
- a pay advance
- repayment of expenses
- redundancy pay
- 'benefits in kind' – for example, childcare vouchers, meal vouchers, company car and fuel, work mobile phone
Example – part of pay does not count towards the minimum wage
Alex is 22 years old and not an apprentice. They're paid weekly and work 40 hours a week.
Their total weekly pay is £540 before tax is taken out. This includes £100 in tips. You need to use £440 as the starting point to work out if they're getting the minimum wage.
When you divide £440 by 40, their average hourly rate is £11. This is below the minimum wage for a worker aged 22. The employer needs to pay at least £11.44 an hour not including tips.
What can be deducted from the minimum wage
An employer is allowed to make some deductions from pay. This could leave someone with less than the minimum wage in their take-home pay. This includes:
- tax and National Insurance contributions
- paying back an advance or overpayment
- pension contributions
- trade union fees
- a charge for accommodation provided by an employer – find out about accommodation rates on GOV.UK
What cannot be deducted from the minimum wage
Some pay deductions and work-related expenses must not reduce pay below the minimum wage.
These include deductions for:
- tools
- uniforms
- travel costs, except getting to and from work
- costs for mandatory training courses