When most people think about National Minimum Wage (NMW) violations in the UK, they imagine workers being paid below the statutory hourly rate. However, a more subtle and widespread issue often flies under the radar, but it is starting to gain awareness, and that is how it affects salaried workers and unpaid overtime.
In many sectors and professions, salaried employees are expected to work additional hours and are not paid for them. This is expected to ‘get the job done,’ show commitment, and ultimately, perhaps be rewarded with career progression. In fact, a recent study has suggested that British workers work around 200 hours extra per year for which they are not paid.
If we put aside the ethics of this (we will cover this later in the blog) and how the future workforce may not be as accepting of this as previous generations, there is a more pressing issue.
Unpaid hours worked effectively reduce the actual hourly rate of a salaried employee, and for lower-paid employees, this could bring them below the National Minimum Wage.
This blog explores this growing concern within the UK employment landscape, its legal implications under British law, and what both employers and employees need to know.
The UK National Minimum Wage framework
The UK has a well-established National Minimum Wage (NMW) and National Living Wage (NLW) system that sets legally binding minimum hourly rates. The rates from 1 April 2025 are:
- £12.21 – National Living Wage (for those aged 21 and over)
- £10.00 – 18-20 year olds
- £7.55 – 16-17 year olds
- £7.55 – Apprentice rate
These rates apply to nearly all workers in the UK, regardless of how they are paid, whetherer hourly, salaried, piece-rate, or commission-based.
For salaried workers, compliance is calculated by dividing the total salary by the total hours worked. This seemingly straightforward calculation becomes problematic when salaried employees work significantly more hours than their contracts specify.
The hidden problem of a culture of excessive hours
The UK has one of the highest average working hours in Europe, with a significant culture of unpaid overtime. According to the Trades Union Congress (TUC), UK workers provide billions of pounds worth of unpaid overtime annually. This creates a particular problem for salaried positions, which often come with an expectation of “flexibility”—a term that, in practice, can mean regularly working well beyond contractual hours without additional compensation.
Consider these scenarios in the UK context:
The nominal 37.5-hour week
A retail manager in London earns an annual salary of £32,000 that, divided by a 37.5-hour work week, equals approximately £16.41 per hour – well above the NLW.
However, they consistently work 50-55 hours weekly during busy periods with no additional pay, bringing their effective hourly rate down to around £12.31, dangerously close to the minimum.
The “always on” professional
A salaried Marketing Co-ordinator making £28,000 annually (£14.36/hr based on 37.5 hours) regularly works evenings and weekends responding to emails and managing social media accounts, bringing their actual hours to 45-50 per week and their effective hourly rate to around £11.97.
The Seasonal crunch
An accountant with a £38,000 salary works reasonable hours most of the year but puts in 60-70 hour weeks during tax season with no overtime pay, potentially pushing their hourly rate below the NLW during these periods.
In each case, when the actual hours worked are factored in, the effective hourly rate may fall below the NLW threshold, and is a clear violation of UK labour laws, despite the seemingly adequate salary.
Legal framework and HMRC enforcement
In the UK, the enforcement of National Minimum Wage legislation falls primarily to HM Revenue & Customs (HMRC). Employers found to be in breach can face:
- Requirement to pay arrears to workers
- Financial penalties of up to 200% of the underpayment
- Public naming and shaming
- In severe cases, criminal prosecution
HMRC has increasingly focused on minimum wage compliance, with particular attention to “time work” violations, including unpaid overtime that effectively reduces hourly rates below the statutory minimum.
But how would HMRC establish what additional hours employees have worked, for which they have not been paid?
As part of a NMW compliance check by HMRC, as well as discussing the business with the business owner, the NMW legislation allows HMRC to discuss with employees what work they do, when they do it and how they do it. In some instances. they can have access to diaries, e mails and phone records to validate what they have been told by employers and employees.
Despite this, enforcement still faces significant challenges:
- Record-keeping requirements – UK employers must keep sufficient records to prove they’re paying the NMW, but for salaried workers, hours often go unrecorded under the assumption that the salary covers all time worked.
- Working Time Regulations – while the UK’s Working Time Regulations limit the average working week to 48 hours (unless employees opt out), this is separate from NMW enforcement.
- Culture of long hours – the UK’s work culture often normalises excessive working hours, making it difficult for employees to challenge these practices.
Salaried workers and Working Time Regulations
Unlike some countries, the UK distinguishes between minimum wage legislation and working time regulations. Many UK employees sign “opt-out” agreements from the 48-hour weekly limit imposed by the Working Time Regulations. However, this opt-out does not exempt employers from NMW obligations.
A common misconception is that certain professional roles are exempt from these protections. While there are some limited exemptions in the Working Time Regulations for “managing executives” and those with “autonomous decision-making powers,” there are no such broad exemptions from the NMW.
The real-world impact in the workplace
The consequences of this issue extend beyond legal compliance and affect the UK workforce in particular ways.
Mental health crisis
The UK has seen rising workplace stress and mental health issues, with the Health and Safety Executive (HSE) reporting that work-related stress, depression, and anxiety accounted for 50% of all work-related ill health in recent years.
Productivity paradox
Despite (or perhaps because of) long working hours, UK productivity lags behind other comparable economies like France and Germany, where average working hours are shorter.
Gender Pay implications
Women in the UK are more likely to have caring responsibilities that limit their ability to work unpaid overtime, potentially affecting career progression in workplaces where such overtime is expected and rewarded..
Best practices for employers and employees
For employers
- Conduct regular NMW audits – periodically review the actual hours worked by salaried employees, particularly in high-risk sectors identified by HMRC such as retail, hospitality, and social care.
- Implement clear working time policies – create explicit guidelines about working hours and ensure managers aren’t encouraging a culture that normalises excessive unpaid overtime.
- Consider TOIL arrangements – Time Off In Lieu (TOIL) is a common practice that can help address occasional overtime, though it must be properly implemented and recorded.
- Review employment contracts – ensure contracts accurately reflect expected working hours and include provisions for additional hours where appropriate.
For employees
- Document your hours – keep personal records of your working time, including evidence such as email timestamps and building access logs.
- Understand your rights – familiarise yourself with both NMW legislation and Working Time Regulations, and be aware that you cannot contract out of minimum wage protections.
- Seek ACAS guidance – the Advisory, Conciliation and Arbitration Service (ACAS) offers confidential advice to workers concerned about wage compliance.
The issue of UK salaried workers effectively earning below the National Minimum Wage due to excessive hours requires attention from employers, employees, and regulatory bodies alike. As flexible and remote working arrangements continue to evolve post-pandemic, addressing this challenge becomes increasingly urgent.
Employers who proactively manage working hours not only ensure legal compliance with HMRC requirements but also foster healthier, more productive workplaces that can help address the UK’s productivity challenges. Meanwhile, employees who understand their rights under UK employment law and document their working time protect themselves from potential exploitation.
