Guidance

About National Living Wage and the National Minimum Wage checks — NMW FS1

Updated 3 May 2024

This factsheet tells you about the checks we carry out to make sure you’re paying your workers at least the National Minimum Wage (NMW) or National Living Wage (NLW).

The NMW and the NLW are the minimum legal amounts that employers must pay their workers. You’re responsible for making sure you pay your workers at least the appropriate rate of NMW or NLW.

You must also keep records to prove you’ve done this.

Our role

We are responsible for making sure that employers pay their workers at least the NMW or the NLW.

We do this on behalf of the Department for Business and Trade (DBT).

We carry out checks on employers, and talk to workers, to make sure all workers are paid what they’re legally due. We choose which employers to check based on (one of the following):

• our own research
• if we’ve received a complaint that an employer is paying one or more of their workers below the NMW or the NLW

We do this under the National Minimum Wage Act 1998.

Our visits and requests for information

The National Minimum Wage Act requires you to produce information we ask for.

During our check, we may ask for information or visit you at your business premises.

We may ask you for any of the following:

• information we think will show that you are paying your workers at least the NMW or the NLW
• explanations of anything contained within records
• additional information we need to determine whether the NMW or the NLW has been paid

If we need to visit you, we’ll try to make an appointment at a time that’s convenient for you. We may need to visit you more than once.

We do not have to tell you why we’re checking records or give you details of any information we may have received.

We’ve made a short video to help you prepare for our checks. To watch this, go to HMRC email updates and webinars for National Minimum Wage.

Communications data

The information we may ask you for might include communications data. Communications data is the who, where, when, and how of a communication but not its content, for example, what was said or written. Communications data relates to the use of a telecommunications service and is held by a Telecommunications Operator.

The National Minimum Wage Act states that you are required to give us the information we ask for. However, this does not include any information that is communications data. The Investigatory Powers Act 2016 governs how we can lawfully get employers’ communications data. This means that, if any of the information we ask you for is communications data, you do not have to give it to us. However, this is still information that would be very useful to us and would still like you to send us if you agree.

For more information about communications data, you can:

• read the Communications Data Code of Practice (November 2018)
• contact the Home Office Knowledge Engagement Team by email at [email protected]

You may wish to take independent legal advice before giving us the information we ask for.

What happens during a visit

We’ll need to speak to you about the:

• work patterns of your workers
• arrangements you have in place for calculating your workers pay

If you are not the person responsible for calculating pay, we’ll need to speak to the person who is.

We’ll need to see records that show how much you pay your workers. We may also need to take copies of some records. It will save time if you have these ready when we visit. If we think there are ways that you should improve your record keeping, we’ll tell you.

We may have to do more research. We may also need to ask you, or your workers, for more information before we can decide whether you’ve paid them at least NMW rates.

At the end of our check

We’ll let you know when we’ve finished our visits and check. We’ll also write to you to confirm any advice we gave to you about changes to your record keeping.

If we’ve found that you’ve paid any of your workers below the NMW or NLW, we’ll let you know if you owe them any arrears of pay.

Arrears of NMW due

We compare the amount your worker was actually paid against the amount they should have been paid if the correct NMW rate had been applied. The difference is the amount they’ve been underpaid. Any amount underpaid must be paid to the worker in arrears.

If the original NMW or NLW rate is the same as the current rate, the amount of arrears will be the same as the amount underpaid.

The original NMW or NLW rate may be lower than the current rate because of an annual rate change or age related rate change. If so, then the arrears due will be more than the amount originally underpaid.

For more information on how arrears are calculated, go to Calculating the minimum wage.

Notice of underpayment

If we find that you’ve paid any of your workers less than the NMW or the NLW, we’ll send you a notice of underpayment. This will tell you:

• how much you owe each worker and when you must pay them
• whether you have to pay us a penalty and when you must pay this by

A notice of underpayment is a legal demand for payment. If you do not pay the amounts due to your workers, we can pursue payment through a civil court or an employment tribunal, or an industrial tribunal in Northern Ireland.

Penalties

We can charge you a penalty if we find that you have paid less than the NMW rates. We will charge penalties if we find any underpayments that relate to pay periods starting on or after 6 April 2009.

For more information, go to National minimum wage law: enforcement.

If you disagree

If you disagree with the notice of underpayment, you can appeal to an employment tribunal. You must do this within 4 weeks of the date of the notice of underpayment. We’ll send details of how to appeal when we send you the notice.

If you do not cooperate with us

We encourage you to help us at all stages of our checks. If there’s a genuine reason why you cannot keep an appointment or give us what we ask for, please tell us as soon as possible. You can find our contact details at the top of the letters we have sent you.

It’s a criminal offence to intentionally prevent us from carrying out our checks or not give us the information we’ve asked for.

Labour market enforcement undertakings and orders

Labour market enforcement (LME) undertakings and orders are intended for more serious or persistent offenders. They may include prohibitions, restrictions or imposed requirements on your business to prevent or reduce the risk of non-compliance.

If you fail to comply with the terms of an undertaking by an agreed date, or refuse to give an undertaking, we will apply to the courts for an LME order. If you breach an LME order, this could ultimately result in one or both of the following:

• a 2‑year custodial penalty
• an unlimited fine

For more about LME undertakings and orders, go to Guidance on calculating the minimum wage.

Criminal prosecutions

If we find that you’ve deliberately broken the law, we may prosecute you. For more about criminal offences regarding NMW and NLW, go to National minimum wage law: enforcement.

Publishing details of employers who break National Minimum Wage law

If we find you’ve paid any of your workers less than the NMW, we will send your details to the DBT. They will then consider whether to name you as an employer who has broken the minimum wage law under the NMW naming scheme.

This is because paying the correct rate of the NMW is very important and the public should be aware of the employers who fail to comply with NMW rules. The DBT will not name you until after we’ve completed our check.

We’ll remind you that the DBT will consider the naming scheme in a case closure letter. We’ll issue this after we’ve completed our checks.

If you think you fall under any of the exceptional circumstances for not being named, you can make a representation to the DBT. You will need to outline why you fall under any of these circumstances.

The exceptional circumstances are:

• naming by the DBT carries a risk of personal harm to an individual or their family
• there are national security risks associated with naming in this instance
• other factors which suggest that it would not be in the public interest to name you or the company — you’ll need to provide details

In practice, the DBT accepts very few representations. This is because the DBT take a restrictive view on what is in the public interest. The DBT have named businesses that have made ‘public interest’ representations on grounds that they:

• inadvertently breached the rules
• relied on advice from a third party
• are a small business that’s relied on by the community

This is because it’s the employer’s responsibility to make sure they are compliant with the legislation.

For more information on the DBT NMW naming scheme, go to National minimum wage law: enforcement.

Your adviser

If you want to appoint an adviser to act on your behalf, you’ll need to send us form 64-8, ‘Authorising your agent’. To get one of these forms, go to Authorise a tax agent.

You can also get one by phoning:

• the officer who wrote to you
• our order line on 0300 200 3610

Your rights and obligations

The HMRC Charter explains what you can expect from us and what we expect from you. For more information, go to HMRC Charter.

To check current and past rates of the NMW or the NLW, go to National Minimum Wage and National Living Wage rates.

Workers’ rights

Workers are legally protected from being sacked or victimised because they’ve complained about not being paid the NMW or the NLW.

If you need help

If you have any health or personal circumstances that may make it difficult for you to deal with us, please tell the officer who has contacted you. We’ll help you in whatever way we can. For more information, go to get help from HMRC if you need extra support.

You can give written permission for someone else to deal with us on your behalf, for example, a professional adviser, friend or relative. However, we may still need to talk or write to you directly about some things. If we need to write to you, we’ll send a copy to the person you’ve asked us to deal with. If we need to talk to you, they can be with you when we do, if you prefer.

More information

If you would like more information, you can:

• phone us on the number in our covering letter
• go to The National Minimum Wage and Living Wage
• go to HMRC email updates and webinars for National Minimum Wage — this offers NMW and NLW webinars and eLearning

The DBT produce detailed guidance about the NMW. To find out more, go to Calculating the minimum wage.

The Acas Helpline provides free, confidential advice in over 100 languages. You can phone Acas on 0300 123 1100.

HMRC may observe, monitor, record and retain internet data which is available to anyone. This is known as ‘open source’ material and includes news reports, internet sites, Companies House and Land Registry records, blogs and social networking sites where no privacy settings have been applied.

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you.

If you’re not happy with our service

Please tell the person or office you’ve been dealing with. They’ll try to put things right. If you’re still not happy, they’ll tell you how to make a formal complaint.