Mythbusting: National minimum wage misconceptions that catch employers out

Below, we tackle some of the most common misconceptions, drawing on recent case law and HMRC guidance, and set out what HR, payroll and compliance teams need to know.

Myth 1: Minimum wage laws are simple

Myth: Some employers may think that complying with the NMW is simply a matter of ensuring workers receive the correct hourly rate.

Reality: NMW compliance involves considering various aspects of a worker’s employment. For example, employers must account for the type of work being performed (eg a night security guard who is required to remain alert throughout a shift), how working hours are recorded (including salaried hours work, time work, output work and unmeasured work), and whether all relevant time such as training, travel between work assignments and time spent waiting for job tasks is correctly included in wage calculations. Overlooking these factors, even accidentally, may result in organisations facing enforcement action, reputational damage and liability for arrears.

Myth 2: All travel time must be paid at NMW rates

Myth: Some employers believe that travel time (whether commuting from home to work, travelling between client appointments or job sites, or riding in a company vehicle) should be counted as paid working time under NMW rules. This misunderstanding is particularly common in sectors like agriculture, construction and domiciliary care, where employers routinely provide transport.

Reality: Not all travel counts as “working time” for NMW purposes. The general rule is that travelling for the purpose of work is included as working time, but travel between the employee’s home and the first or last place of work is excluded, even if the employer arranges transport.

The simple fact of being in an employer’s vehicle does not automatically qualify as working time for NMW. For travel time to be counted, the worker must be travelling for the purpose of working – that is, in connection with their employment and under instruction or obligation from the employer. Time when a worker would otherwise be working is normally included. This includes situations where a worker is required to:

• Conduct a briefing;
• Handle equipment; or
• Perform other tasks while travelling.

The recent case of HMRC v Taylors Services Ltd [2025] EWCA Civ 956, which concerned “time work” (those who are paid according to the hours they work), confirmed that even long, difficult commutes in employer vehicles do not automatically count as working time for NMW purposes.

Myth 3: Night shifts always count as working time

Myth: Workers on night shifts are entitled to receive NMW for the whole shift, including sleep time.

Reality: Only time spent awake and working counts, even if the employer provides sleeping arrangements. The Supreme Court in Royal Mencap Society v Tomlinson-Blake [2021] UKSC 8 clarified that “keeping a listening ear” does not amount to working.

Sleep-in shifts are common in the care, security and hospitality industries. There is a balance to strike between employers avoiding unnecessary costs by not overpaying for sleep-in time and ensuring they don’t underpay workers for active work, which could lead to investigations by HMRC and back pay claims.

Myth 4: NMW applies only to hourly-paid staff

Myth: It is a misconception that employers with salaried workers earning a high salary comply with NMW laws automatically.

Reality: NMW laws cover all workers, even those earning an annual salary. What matters is the average hourly pay based on the actual hours worked (see: Hours worked during pay reference period). For example, if a salaried employee is contracted for 40 hours per week but regularly works 50 hours and is not paid overtime, their actual hourly rate may fall below the NMW. This rule applies across different roles and industries, meaning employers cannot use job title or status to avoid NMW obligations.

Myth 5: NMW compliance is about pay rates only

Myth: It is a common misconception that paying at or above the NMW hourly rate ensures compliance.

Reality: Employers must also account for deductions, unpaid working hours and other factors such as mandatory training or uniforms, which can effectively reduce an employee’s pay below the minimum wage. Compliance involves employers carefully monitoring total earnings against all relevant minimum wage regulations.

Myth 6: NMW enforcement is minimal

Myth: It is a misconception that enforcement of NMW rules is rare and targets only large companies or very serious cases.

Reality: Regulatory bodies have adopted a proactive stance, routinely investigating employers across all sectors and sizes, from small businesses to multinational corporations. The scope of enforcement extends beyond merely checking whether an employee’s hourly pay meets the NMW threshold. Inspectors will review whether all aspects, such as overtime, travel time and sleep-in shifts, have been calculated and paid correctly.

The launch of the Fair Work Agency will develop enforcement powers, including workplace inspections, record demands and criminal proceedings for serious breaches. Employers in all sectors are at risk, regardless of size.

Key takeaways for HR

To ensure compliance with NMW regulations, HR and compliance teams should address all relevant factors of pay and working time:

• Prioritise regular audits across all levels of the business to review job roles, pay structures, employment contracts and actual working patterns.
• Keep robust records of hours worked, pay calculations, timesheets and any deductions, providing clear evidence of compliance and helping prevent or quickly resolve potential disputes.
• Provide ongoing training to payroll and line managers, especially in complex areas like travel or overnight stays.

Fostering a culture of transparency, accountability and education is essential for maintaining compliance with NMW regulations. Organisations must have clear and accessible policies in place, outlining procedures for reporting issues, whistleblowing and raising questions about pay.