National Minimum Wage - and accommodation costs - Be aware!

A salutary reminder following report in the press of an independent hotel operator being served with a ‘notice of underpayment' in the sum of £25,000 for ‘overcharging' for accommodation provided.

The National Minimum Wage (NMW) regulations not only prescribe NMW rates but also off set rates for accommodation provided which can be taken into account, when calculating payment of the NMW. In this case it would appear that more was charged for the accommodation provided which meant that the minimum wage was not being received by the affected employees.

Those offering accommodation to employees need to be alert to this.

Accommodation provided by an employer can be taken into account when calculating the minimum wage and the current offset rate for accommodation charges is £5.08 a day (increasing to £5.35 a day in October).

Three possible scenarios follow:

• If an employer charges more than the accommodation offset amount the difference is taken off the employee's pay which counts for the minimum wage. 
• If the accommodation charge is at or below the offset rate, there is no effect on the employee's pay. 
• If the accommodation is free, the offset rate is added to the employee's pay.

Where employers charge more than the accommodation offset amount, they must then ensure the employee is not paid less than the NMW once this has been taken into account.