The latest list of employers named and shamed for failing to pay the national minimum wage (NMW) has been published with 139 employers named in respect of 97,000 workers underpaid a total of £6.7 million. The list includes household names such as Tesco, Pizza Hut and Superdrug. Are these really all "rogue bosses" as labelled by the Business Minister or does the latest list tell a different story? In our experience, the vast majority of NMW breaches arise from a failure to understand some of the complexities in the NMW legislation and the "rouge" label is unjustified. Tesco has stated they self-disclosed their issues to HMRC, having identified a technical issue leading to an NMW liability in excess of £5 million.
All employers need to be mindful of the complexities that can lead to technical breaches. In particular, those employers who pay, or close to pay, the NMW can very easily fall into non-compliance. Example key risk areas include:
- Uniforms. A requirement to wear black trousers, for example, will be regarded as leading to expenditure by an employee in connection with their employment. Any expenditure by a worker in connection with employment reduces eligible pay.
- Failing to treat all eligible hours as working time. Travel between workplaces and time spent waiting to work will all count. Have your front line workers picked up additional duties relating to Covid-19 which means their hours have increased? For example, collecting PPE or attending weekly testing. This is all time that will count as working time.
- Training. Any time spent training is likely to count as working time. In addition, any requirement to pay for or reimburse training costs will reduce eligible pay. Increasingly HMRC will focus on repayment clauses applied on termination of employment.
- Deductions. Many deductions made from a workers pay will reduce eligible pay, even if the deduction is made for the employees' benefit. One example of how far this can extend related to Middlesbrough Football Club making deductions from pay for a savings scheme towards the purchase of a season ticket. These agreed deductions reduced pay below NMW.
- Salary sacrifice schemes. Employers who operate a salary sacrifice scheme need to be mindful that it is the reduced salary that is eligible for NMW.
For more information or help to ensure you are compliant and don't end up being labelled a "rogue" do get in touch.
139 companies, including major household names, have short-changed their employees and have been fined offending firms failed to pay £6.7 million to their workers, in a completely unacceptable breach of employment law Business Minister Paul Scully says the list should be a ‘wake-up call’ to rogue bosses, as department relaunches naming scheme after 2-year pause