On the 8th of March the Government released its latest list of businesses who failed to pay the National Minimum Wage. A number of high profile businesses were listed. Some of these businesses probably intended to pay the national minimum wage, but were caught out by complexities in the legislation, as the examples below illustrate.
St Helens Rugby League Club explained their underpayment as mostly relating to a misunderstanding regarding training casual staff. The club had not realised that match day stewards needed to be paid for a two hour training session at the start of each season. The requirement to pay for training is however clearly set out in the Act and, even for casual staff; these hours need to be paid. This is even the case if training is provided to a large group of potential stewards at the start of the year, some of whom do not go on to work at matches or events.
Stoke City Football Club explained that their issue related to deductions from employees pay for items purchased from the club. Had the staff simply paid cash for these tickets and merchandise there would have been no issue but, as a deduction had been made directly from the employees’ pay for these items, the deduction was counted for the purposes of national minimum wage calculation. Although allowing such deductions may appear convenient, it can give rise to the issue Stoke City experienced and the club has confirmed that it has now stopped this practice.
Restaurant chains Wagamama and TGI Fridays were examples of employers who blamed uniform issues. Wagamama has repaid an average of £50 to 2,630 employees. TGI Friday’s had to repay £25 each to 2,300 staff. They both fell foul because their staff had to buy specific items of clothing (e.g. casual black trousers) to wear to work with a branded top which they supplied. As they were not reimbursed for these items, this effectively meant a deduction to pay, meaning some employees had not received the national minimum wage. Even if the items can be used by the employees outside of work, the fact that they have to be purchased for work is sufficient for national minimum wage purposes.
Peter Stanway, our BackupHR™ legal expert comments:
As rates increased on 1 April 2018, the above examples present cautionary tales and demonstrate that minimum wage compliance cannot be taken for granted by simply paying an hourly rate that is at least the required amount. The Government’s powers of enforcement allow compliance officers to commence an investigation and remove information from an employer’s premises with little, if any, warning and conduct a very thorough analysis of records. There is also a potential negative PR effect of non-compliance (in addition to the fines and potentially criminal liability).
The complexity of the national minimum wage and the way HMRC determines working time, means that some employers can make ‘genuine mistakes’.
- Pay for training sessions which are required as part of the job
- Be very careful about staff purchasing schemes
- Ensure all working time is recorded and paid
- Do not make deductions that take wages below the NMW threshold
- Review your uniform policy and consider paying a uniform supplement
- Conduct reviews of systems and working practices, to identify exposure
Employers need to look at remuneration as a whole, not just the hourly rate they pay their staff, if they are to avoid the ‘list of shame’.
The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for a free initial chat on 01480 677980.