Am I Being Paid the Right Minimum Wage? 5 Tricks Employers Use to Underpay

HMRC's most recent "naming and shaming" list of minimum wage violators included over 400 employers — from large retailers to care providers and hair salons. The violations are often subtle. Here are the five most common methods employers use to pay workers below the minimum wage.

Trick 1: Including Tips in Wages

Tips, gratuities, and service charges cannot count toward meeting your minimum wage entitlement. If your employer is using tips to "top up" your pay to the minimum wage, that's an illegal practice. Your basic salary alone must meet the NLW.

Trick 2: Deducting Uniform or Equipment Costs

If your employer requires you to buy a uniform, safety equipment, or work tools and deducts the cost from your pay, this deduction cannot reduce your hourly rate below the minimum wage. If it does, the effective wage is below the legal minimum — a violation.

Trick 3: Not Paying for All Working Time

Working time includes mandatory training, team meetings before shifts start, and — as noted above in the care sector — travel between client visits. If you're "clocked in" later than you actually started working, your effective hourly rate may be below the minimum.

Trick 4: Wrong Age Banding

The minimum wage has different rates for different age groups. Some employers "forget" to update pay when a worker turns 18, 21, or 25. On your birthday, your pay rate should automatically increase without you having to ask.

Trick 5: Salary Sacrifice Below Minimum Wage

Salary sacrifice arrangements (for pensions, EVs, etc.) cannot reduce your effective gross pay below the minimum wage. If you're close to the minimum and you're in a salary sacrifice scheme, this is worth checking carefully.

Frequently Asked Questions

How do I calculate my effective hourly rate?

Take your total gross pay for the pay period. Divide by the total hours you actually worked (including travel, meetings, training). If the result is below £12.71 (age 21+), you may be underpaid.

What can I do if I'm being underpaid?

First, try raising it with your employer — mistakes do happen. If they won't act, contact ACAS for free advice or report directly to HMRC at gov.uk/report-problem-minimum-wage. HMRC investigates all reports.

Check what you should be earning with our Minimum Wage Checker.