National Minimum Wage Implications For Allowances

The recent case of Smith v Oxfordshire Learning Disability NHS Trust has provided some clarification on the legal situation regarding allowances and the National Minimum Wage (NMW) Regulations.

Where allowances are not consolidated into basic pay, they are not to be included in NMW calculations. This could include allowances for:

• Being on-call.
• Working unsocial hours.
• Performing special duties.

The case in question concerned Mr Smith, a care worker in a residential care home for adults with learning disabilities. He worked at the home for 15 hours a week, and was sometimes required to sleep there, for which he received £25 for a nine-and-a-quarter hour period.

His claim alleged that he was being paid less than the NMW for his work at the home. For the fifteen hours he worked, his pay rate was £7.94 - well above the NMW. However, he argued that if the nine hour sleeping period was added on to his 15 hours, his average pay rate dropped beneath NMW