COMPLIANCE
Jeni Morris, IPPE Consultant, discusses the importance of ensuring organisations are aware of, and educate their staff on, the intricacies of the national minimum wage (NMW)
T he NMW is designed as a vital more complex and, paradoxically, more fragile for both workers and employers. The ever-evolving landscape of minimum wage legislation calls for robust education, not just among payroll professionals, but also among business leaders and employees themselves. Why vigilance matters Paying the new statutory minimum isn’t just about raising wages; it’s fundamentally about compliance. The rules surrounding NMW are intricate, and breaches which are often inadvertent are distressingly common. Factors such as additional working hours, variable pay deductions (e.g., salary sacrifice or uniform costs) or misclassification of worker types routinely trip up even the most diligent of employers. Recent HM Revenue and Customs safety net for millions of UK workers. However, this safety net is becoming (HMRC) ‘name and shame’ campaigns have highlighted hundreds of businesses, across all sectors and pay bands, for falling foul of these technicalities. Notably, these enforcement actions show that NMW risk extends far beyond the lowest paid. Middle management and salaried employees are increasingly at risk due to misapplied rules, overlooked overtime or incorrect contract categorisation. Worker categories: education as the compliance foundation At the heart of NMW governance lies a critical step: getting worker categorisation right. Employers must accurately define
each category has its own NMW calculations, risk zones and compliance requirements. Inadequate education in this fundamental area is a leading cause of unintentional underpayments. Pinpointing the appropriate work category is crucial because each one has differing rules to follow for the correct NMW calculation and the criteria can vary significantly.
l the correct worker categorisation and record-keeping l monitoring and documenting contractual versus actual hours for all roles l ensuring policies around time off in lieu, salary sacrifice and allowable deductions are compliant l running regular, documented compliance checks, helped by strong payroll and human resources systems. Recent HMRC webinars and guidance heavily stress the need for employers to keep accurate time records for salaried workers – a common weak spot in many organisations. Education drives ethical pay and resilient business The best defence against NMW breaches, especially as the regulatory bar rises, is a culture of compliance, built on up-to-date education, attentive contract management and proactive risk assessment. As more employees approach the NMW threshold, every organisation should treat robust education as both a legal necessity and a commitment to workplace fairness and sustainability. Ultimately, enhancing the NMW landscape through education empowers every stakeholder, from payroll to upper management, so that a safety net exists, and that it serves its purpose in protecting workers and reputable businesses alike. n A little reminder that IPPE has a comprehensive NMW Masterclass Series , which I deliver, to help support businesses with their ongoing NMW education. See more here: https://ow.ly/3zpZ50WvZWu.
The unique risk of salaried workers
A widespread myth persists that salaried workers, especially those earning well above the NMW, are safe from compliance risk. This is false. For these employees, compliance is judged over a calculation year, and even a small amount of extra unpaid overtime or unmonitored hours can push even high earners below the legal minimum over 12 months. Take the scenario of an employee on £50,000 a year, contracted for 40 hours a week. Working as little as one hour of unpaid overtime per day could technically deliver an NMW breach by month 11, triggering: l back pay l penalties of up to 200% of the underpayment l severe reputational damage for the business. Robust systems and regular education are essential Education isn’t a one-time exercise. Given
the frequency of legislative changes and annual rate increases, employers require continuous investment in staff training around:
whether an employee is salaried, time, output or unmeasured, as
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| Professional in Payroll, Pensions and Reward |
Issue 113 | September 2025
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