National Minimum Wage Compliance - an important consideration for GP surgeries and Health Centres

Ensuring National Minimum Wage (“NMW”) compliance can be complex for many employers, including those in the health sector. We are aware that HMRC is currently targeting health sector organisations as part of its continuing programme of challenging employers to ensure that they are paying NMW, including asking many to review their own NMW position for the last 6 years. Increasingly GP practices and Health Centres may be inadvertently falling foul of the NMW rules and certain contractual arrangements can lead to issues when categorising workers (see below). 

There are 4 categories of work for NMW purposes. Each category has its own calculation method for NMW, including what can be included in pay. Incorrectly categorising worker types can lead to underpayments of NMW.

• Salaried hours work – Workers paid an annual salary, in equal instalments for a set number of basic “ascertainable” hours. It should be noted that merely stating weekly hours in an employment contract may be insufficient to meet the criteria for salaried hours workers.
• Time work – Workers paid by the hour for the time they spend working.
• Output work – Workers paid per piece or task completed (also called piece rate work). Unmeasured work – Workers whose annual hours are not predetermined, including those with irregular tasks or flexible schedules.

• Problems can arise in cases where a worker has to perform pre‑work tasks such as, loading up computers or working beyond their contracted hours. All time should be included as working time for NMW purposes.
• If you have “rounding” in the payroll system to account for any overtime, this is not accurately reflecting actual working time. (An example of this is where individuals are only paid overtime when they work 15 minutes or more above their contracted hours.) Any time in excess of their normal working hours counts as working time for NMW purposes. Not taking this into account can lead to NMW underpayments.
• The concept of TOIL does not exist for NMW purposes. Therefore, ignoring salaried work, which has its own strict criteria, employers must monitor additional time worked to ensure that it is taken back in the same or following pay period to evidence NMW compliance and avoid underpayments.

• Salary sacrifice will always reduce pay for NMW purposes.
• Additionally, deductions from pay (with a few exceptions) need to be taken into account when deciding whether NMW had been paid. Examples include uniforms, costs associated with a dress code, and administration fees where you are processing attachment of earnings orders.

• Having to repay arrears at current rates of NMW,
• Penalties of up to 200% of arrears (capped at £20,000 per worker),
• Being publicly named and shamed for failure to have paid NMW.

Where an employer identifies an NMW underpayment and self-corrects this, before any contact from HMRC, HMRC will not charge penalties or name and shame the employer.

There are steps that you can take, and we can help you with:

• We can help carry out payroll audits now to ensure accurate worker categorisation has been used and that NMW has been paid.
• We can review employment contracts and handbooks to establish the correct worker type.
• Identify any workers who may at risk of being underpaid.
• Where underpayments have arisen we can guide you through the process of self‑correction.
• Provide advice to help you strengthen record keeping around hours, (you are required to keep records for 6 years), deductions, and pay calculations.

The NMW rises in April 2026 mean that any underpayment of NMW, whatever the period involved, must be repaid at current NMW rates. It is vital that if any NMW underpayment is self‑corrected this is correctly communicated to the employee/ex‑employee to ensure that HMRC recognises it as such.

APPENDIX 1 From 1 April 2026, new increased NMW rates take effect. (see Appendix for new rates) Confirmed NMW Rates from 1 April 2026