National Minimum Wage for piece work

Yes, in most cases you are entitled to the National Minimum Wage even if you are paid per job, per delivery, or on a piece rate basis. The key question is your employment status, not the way your pay is structured.

Legal position:

The National Minimum Wage Act 1998 and the National Minimum Wage Regulations 2015 apply to all "workers" in England and Wales. A worker is someone who has a contract to perform work or services personally for another party, provided that party is not a client or customer of a business carried on by the individual. This is a broader category than "employee" and captures many people who are described by their engager as self-employed, freelance, or independent contractors.

If you are a worker, your engager must ensure that your pay, when averaged over the relevant pay reference period, does not fall below the National Minimum Wage rate. The pay reference period is usually one month or, if you are paid more frequently, the period between pay days.

How piece rates and per-delivery pay are treated:

Where you are paid per task, per delivery, or per job, this is classified as "output work" under the Regulations. Your engager has two main options to comply with the law.

1. They can calculate your pay by reference to actual hours worked and ensure the hourly average does not fall below the minimum wage.

2. They can use a "fair estimate" of the hours it would take to complete the work. This fair estimate agreement must be agreed in writing before the work is done. The fair estimate must be realistic, and HMRC will scrutinise it to make sure it is not artificially low.

If your engager does neither, or if the fair estimate is unreasonable, and your effective hourly rate drops below the National Minimum Wage, they are in breach.

The gig economy and recent developments:

This issue has been heavily litigated in the gig economy context. The Supreme Court in Uber BV v Aslam (2021) confirmed that Uber drivers were workers, not self-employed contractors, and were therefore entitled to the National Minimum Wage. The court looked at the reality of the working relationship, not just the contractual label. The same reasoning applies to couriers, delivery riders, and others in similar arrangements.

The fact that a company calls you self-employed, or puts a substitution clause in your contract, or says you have no obligation to accept work, does not necessarily mean you fall outside worker status. Tribunals and courts look at the practical reality, including the degree of control exercised over you, whether you can genuinely send a substitute, and whether you are truly running your own business.

Practical considerations:

If you suspect you are being paid below the National Minimum Wage, there are several things worth doing.

1. Keep detailed records of every hour you work, including time spent waiting, travelling between jobs if required, and any other time under your engager's direction. This is crucial evidence.

2. Calculate your effective hourly pay by dividing your total pay in a pay reference period by the total hours worked. Compare this against the current National Minimum Wage rate, which from April 2024 is £11.44 per hour for those aged 21 and over.

3. Raise the issue informally with your engager first if you feel comfortable doing so.

4. If that does not resolve it, you can make a complaint to HMRC's National Minimum Wage enforcement team. They have the power to investigate, issue notices of underpayment, and impose financial penalties on the engager. You can contact them through the online complaint form on GOV.UK or by telephone. The complaint can be made anonymously if you prefer.

5. Alternatively, you can bring a claim in the employment tribunal for unlawful deduction from wages under section 13 of the Employment Rights Act 1996, or for a declaration that you are entitled to the National Minimum Wage. There is no fee to bring a tribunal claim, but you would need to go through ACAS early conciliation first.

Important points to be aware of:

Genuinely self-employed people running their own business, setting their own prices, and working for multiple clients in a truly independent way are not covered. The dividing line between worker and genuinely self-employed is fact-sensitive and often contested.

Time limits for tribunal claims are generally three months less one day from the date of the last underpayment, extended by the ACAS early conciliation period. HMRC complaints do not have the same strict time limit and can cover up to six years of arrears.

If you are unsure about your status, the facts of your working arrangement are what matter most, so gathering evidence about how the relationship actually operates in practice is the most useful starting point.