The National Minimum Wage legislation was introduced with effect from 1st April 1999. Since then employers have been required to pay staff at an hourly rate of at least the national minimum wage. These rules are formulated by the low pay commission and are policed by HMRC.
HMRC published their interpretation of these rules, which recognise that certain directors are exempt:
”If a person is a director, and he/she does not have an explicit employment contract, then he/she is unlikely to be subject to this legislation. He/she is acting for the company in the capacity of office holder, not as a worker”.
This marks a U-turn in previously understood Revenue interpretation, which sought to include directors under these rules, by arguing that an unwritten or implied employment relationship existed, even if not evidenced in writing.