While most employees and workers will be entitled to the National Minimum Wage (NMW), there are certain groups who are exempt from this requirement, meaning they are free to agree their own rate of payment. Croner Taxwise explains the groups and where the exemptions lie.

Self-employed contractors

Most notably, self-employed contractors running their own business are exempt from the NMW. These individuals won’t typically operate under a contract for services, will be free to agree their own quote for providing services and will have the unfettered right to substitute someone else in their place.

Self-employed individuals

Although self-employed individuals are exempt from the right to receive the NMW, employer must be wary of incorrectly treating staff as self-employed and withholding employment rights in the process. A number of recent employment status disputes have seen employers penalised for treating staff as self-employed, when they were, in fact, employees or workers. Therefore, it is important that organisations provide staff with the appropriate employment rights based on the true nature of their working relationships.

Volunteers

Volunteers are another group who are exempt from the NMW as these individuals voluntarily provide their services free of charge. Employers may issue these individuals with some money to cover expenses and this is usually limited to food, drink, travel or any equipment they may need to purchase.

Interns

Although common in many industries, unpaid internships have been under the microscope in recent times, with critics arguing these relationships are being used to unlawfully withhold pay from individuals who are actually carrying out the duties of employees or workers. Employers should keep in mind that it will only be possible to withhold pay from interns when the internship forms part of a further or higher education course (and lasts no more than a year), work experience, or if they are merely shadowing a member of staff and will carry out no work themselves.

School leavers

Employers are not obliged to pay the NMW to anyone employed under the school-leaving age, which means they are free to agree their own rate of pay with those employed during the summer holidays or for weekend work.

Family members

Organisations may also be unaware that family members who live in their employer’s home are exempt from the right to receive the NMW, as are non-family members who share in the work and leisure activities of the home and are not charged for meals or accommodation, such as au pairs.

Top tips for employers

  • Review your organisations’ pay practices to ensure they are issuing staff with the NMW where necessary.

  • Ensure staff are provided with appropriate employment rights based on the true nature of their working relationships.

  • In a situation where staff have incorrectly been missing out on the NMW, this should be addressed immediately in order to prevent punitive action from HM Revenue & Customs.

Seek professional advice

For professional advice on dealing with any HR matters, speak to a qualified consultant on 0844 561 8149.

Last reviewed 11 December 2019