National Minimum Wage

Are there any exemptions for small businesses?

There are no exemptions because of the size of business, or because of the sector, job or region.

What counts as pay?

As well as a worker's basic pay, there are other elements of pay which may count towards the National Minimum Wage hourly rate. These include incentives such as merit or performance-related pay, and bonuses.

Extra money above basic pay (for example, overtime or shift work premiums) do not count. Regional allowances which are not included in an employee's basic pay do not count.

All benefits in kind (benefits other than money), except accommodation, do not count. The accommodation benefit is £4.46 a day.

What counts as hours?

The number of hours for which workers must be paid the National Minimum Wage is worked out according to the type of work they do. There are four different types of work.

• Time work: the number of hours or period of time is set by the employer. You must pay workers at least the National Minimum Wage in each pay period (usually the period of time for which a worker's wage is actually worked out), but you may take account of different hours worked in different periods.
• Salaried-hours work: a contract to work a set number of basic hours each year with a yearly salary paid in equal instalments. You must pay workers at least the national minimum in each pay period.
• Output work: workers paid purely according to their productivity, for example, how many products they produce or their sales. You may make an agreement, in writing, with a worker that gives a 'fair estimate' of the number of hours they will work. If you do not make an agreement, you must pay the worker at least the National Minimum Wage for the hours they actually work.
• Unmeasured work: for workers where there are no set hours or measures of their output. You may make an agreement, in writing, with a worker that estimates the average number of hours they will work each day. If you do not make an agreement, you must pay the worker at least the National Minimum Wage for the hours they actually work.

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