The Department of Business and Trade (DBT) has indicated that the largest reason for the May 2025 named employers breaching National Minimum Wage regulations was because of pay deductions.
Paying National Minimum Wage is not about an employees original hourly rate, but about the rate actually received for all working time.
Minister for Employment Rights, Justin Madders:
There is no excuse for employers to undercut their workers, and we will continue to name companies who break the law and don’t pay their employees what they are owed.
Whilst not all minimum wage underpayments are intentional, the Government is clear that enforcement action will be taken against employers who do not pay their staff correctly.
Whilst some deductions do not reduce NMW pay, others do.
Of the 518 newly named employers who have breached NMW regulations and been charged penalties, 34% representing 178 related to reductions or deductions from wages which took pay below the individuals relevant minimum pay rates.
Whilst deductions for repayment of loans, pension, payment of union membership and voluntary payments to organisations not connected to the employer may be permitted, a sizeable proportion of employers found to be in breach have made deductions or reductions which have resulted in underpayment to their employees.
So what are the common deductions / reductions which do reduce earnings for NMW purposes?
- Food and meals deducted via payroll
- Parking permits
- Work travel costs
- Cost or the payment for the loss of work equipment and/or Personal Protection Equipment (PPE)
- Stock or till shortage
- Training costs
- Christmas savings schemes operated and controlled by y the employer
- Uniform
- Childcare costs
- Salary Sacrifice schemes to receive employer provided benefits including enhanced employer pension contributions
- Worker costs to purchase dress code clothes
In 2020 the educational bulletin for Round 16 focussed on the challenges with deductions and NMW
PAYadvice.UK 3/6/2025