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Mistakes to avoid with the National Minimum Wage: Common pitfalls and misconceptions

How clear is the law surrounding the National Minimum Wage (“NMW”)

The law is relatively clear on this, the NMW sets different minimum rates of pay for different age groups; all of which are detailed on the government website.

These rates are for the National Living Wage (for those aged 23 and over) and the National Minimum Wage (for those of at least school leaving age). The rates increase on 1 April every year.

23 and over21 to 2218 to 20Under 18Apprentice
April 2021£8.91£8.36£6.56£4.62£4.30

The rules can be slightly tricky and you should get legal advice if;

  • you’re not paid for time travelling on business, e.g., between appointments
  • you haven’t been paid for time spent on a training course
  • you’re not paid for time ‘on call’
  • your employer takes money from your wages for accommodation

Is it easy for employers to innocently fall foul of the law or do some employers simply think they can get away with not paying the minimum wage?

From experience, most of the time it’s unintentional rather than deliberate. It is, however, a common problem, as 191 companies investigated between 2011 and 2018 failed to pay £2.1m to more than 34,000 workers. The businesses were made to pay back the money as well as being fined a total of £3.2m. Pret, McColls and Welcome Break said the underpayments were historic errors and staff had been swiftly reimbursed. Nearly half of the breaches involved firms deducting pay from wages, for things like uniforms and expenses. Others failed to pay for all the time staff worked or paid the incorrect apprenticeship rate.

Common examples when it goes wrong are when deductions are made from salary, say for causing damage to company property or for failing to return equipment – such deductions can, and often do, take people’s pay below the NMW. 

Another common pitfall is forgetting (or failing) to amend someone’s rate of pay when they move from one age bracket to the next or finish an apprenticeship. There are a lot of variables and when you have a lot of staff this can be hard to monitor if you are not keeping good records of this important information. 

There is some uncertainty around if the staff should be whilst asleep, accommodation allowances and how to determine to pay for travel time to clients (perhaps for people on the road a lot), therefore there are several ways where employers can unintentionally get it wrong.

If an employer has staff that fall into one of the above circumstances it is really important that they seek advice but also that that they keep a really clear record of all hours worked. Employers need to have trigger points for age increases to avoid being sued in the tribunal and then “named and shamed” on the HMRC website, which attracts adverse publicity. 

What can a worker do if they think that their employer isn’t paying them the legal wage?

You can raise a formal grievance against your employer in the first instance, using your employer’s grievance procedure which can usually be found in the company handbook. You should write a letter explaining why you think you haven’t been paid enough and say you want them to pay the difference. 

If your grievance doesn’t get the result you want, you can take your employer to a tribunal. You’ll have to notify Acas first; this is an organisation that provides independent support to try and settle employment disputes. They’ll see if your employer will agree to a process called ‘early conciliation’ – a way to resolve disputes without going to a tribunal.

Regardless of whether you raise a grievance with your employer, you can report them to HMRC, who will decide whether to investigate your employer. There’s no guarantee that they will, but they’re more likely to do so if they receive multiple complaints against the same company. It could take a long time, so it’s best not to rely on this as a way to get the money that you’re owed.

What advice and guidance is there for employers to ensure that they are paying their staff correctly? 

Practical tips for employers 

  • Keep records – make sure that you have accurate time sheets which reflect what hours people have actually worked, rather than what hours they had agreed to work
  • Check those records regularly, perhaps have an audit once a month of a handful of example timesheets, to see whether they are being accurately completed
  • There are electronic recording systems – they may be much more consistent and better if you have a lot of staff to monitor, especially to notify you when someone’s birthday takes them into a new NMW bracket
  • Make sure that your employment contract is clear on the obligations to record time accurately – that way you have recourse if part of your issue is employees not accurately recording their time
  • Stress the importance of good records to management- they need to understand why this is so important and what the consequences are of them not enforcing or checking timesheets adequately
  • Consider if any proposed deductions from wages will take staff below NMW

How can Thrive help employers? 

Thrive offers an inclusive HR service under which we can help employers to ensure they are paying their staff the correct amount and assist them in putting systems in place to ensure they remain compliant. This offering includes a comprehensive review of all contracts and handbooks as well as unlimited contact with your dedicated solicitors and HR specialists. Visit the HR page on our website to calculate how much your HR retainer would be. 

How can Thrive help you are an employee?

If you think that your employer is paying below the national minimum wage, please get in touch for a free initial assessment at enquiries@thrivelaw.co.uk.  

Disclaimer…

Please note this blog is for reference purposes only and is only accurate at the date it was published. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action. Please contact us if you have any questions at enquiries@thrivelaw.co.uk   

 

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