This information has been prepared by SESCA in conjunction with the National Minimum Wage (NMW) Department at HMRC. It highlights the main causes of NMW underpayments in the social care sector, along with signposting to guidance and extra support.
In 2024/25, His Majesty’s Revenue & Customs (HMRC) identified over half a million pounds of arrears for over 2,000 workers in the social care sector.
Mistakes are easy to make when calculating wage payments, even when staff are paid above the minimum wage. Here are the most common causes of underpayment:
Underpayments occur when extra hours are worked but not paid. Examples include:
Travel between clients
Waiting or ‘down time’
Awake hours during sleep-ins
Standby time at or near the workplace
Mandatory training onsite or at home
Costs linked to employment can bring pay below the NMW:
Uniforms, training, safety clothing
Admin fees, meals, transport deductions
Accommodation deductions exceeding the allowable offset
Errors can arise from:
Missed annual rate increases
Failing to adjust rates when workers move age bands
Incorrect apprentice rates
The NMW calculation depends on work type:
Salaried, Time, Output, or Unmeasured Each has distinct rules on how hours are counted. Errors in classification can lead to underpayment.
Shift premiums or allowances (e.g. on-call, weekend, sleep-in) often cannot be counted toward NMW. Excluding these may reveal actual pay is below the legal minimum.
Charges or deductions for accommodation can lower NMW pay if they exceed the daily accommodation offset.
Misclassifying workers as volunteers, interns, or self-employed may deny them NMW. Most individuals who receive something of value in return for work are likely entitled to NMW.
Giving up part of salary for benefits (e.g. car schemes, pensions, cycle-to-work) reduces the pay counted toward NMW.
Paying staff correctly is a legal requirement. HMRC has the right to inspect payment records and investigate complaints.
If an employer underpays:
Arrears must be repaid
A penalty of 200% applies
Offenders may be publicly named
Employers can avoid penalties and public naming by correcting errors before HMRC opens a compliance check.
Adjust working practices
Calculate and repay arrears
Contact affected ex-workers
Inform HMRC via the voluntary declaration process
To request the form, email: voluntarydeclaration.nmw@hmrc.gov.uk
NMW & Protecting Care Workers’ Rights – Webinar RecordingsOriginally aired on 29 July 2025, this live webinar was hosted by HMRC, the Gangmasters and Labour Abuse Authority (GLAA), and the Employment Agency Standards Inspectorate (EAS). The session explored NMW compliance in the adult social care sector, with a focus on protecting care workers from underpayment and exploitation.
A suite of further recorded HMRC webinars on NMW compliance can be found at: www.gotostage.com/channel/nationalminimumwage
Contact for queries:
HMRC NMW mailbox: nmw_promote_mailbox@hmrc.gov.uk
Confidential advice: ACAS – 0300 123 1100