National Minimum Wage and National Living Wage - calculating minimum wage pay

When you make a deduction from a worker's pay, it will reduce minimum wage pay if it is for expenditure connected with the employment or if it is for your use and benefit.

Deductions that don't reduce minimum wage pay

However the following deductions from workers' pay and payments by workers connected with their employment do not reduce their minimum wage pay:

• Deductions of income tax and National Insurance contributions (NICs).
• Deductions for student loans.
• Deductions from pay allowed under the worker’s contract which relate to misconduct or a related matter such as negligence, or payment by the worker of a specific penalty or in respect of ‘any other event’ for which the worker is responsible and contractually liable. Where the deduction or payment is not in respect of the worker’s misconduct but for another matter, this matter must have some relationship to the voluntary conduct of the worker. If you amend a worker’s contract (which must be done lawfully) to include a previously omitted entry relating to misconduct – the new entry may only be applied to misconduct events taking place after the amendment was made.
• Deductions from pay or payment by the worker because of an advance of wages or on account of an advance under an agreement for a loan.
• Deductions from pay or payment by the worker for the purchase of shares, other securities or share option, or any share in a partnership.
• Deduction from pay or payment by the worker to recover an accidental overpayment of wages.
• Deductions from pay that are not for expenditure connected to the worker’s employment or for your own use and benefit. See deductions not connected to a worker's employment or for the employer's own benefit.
• Voluntary payments by the worker for the purchase of goods and services from you – for example payments for meals the worker has freely chosen to buy in the staff canteen (however, if you deduct money from the worker’s pay in these circumstances this will reduce minimum wage pay).
• Certain deductions from pay and payments by the worker for accommodation if the charge for the accommodation is at or below a certain level.