Are you clear on your National Minimum Wage obligations?

Given the amount of press coverage recently about big companies being fined for failing to pay the minimum wage, if you are an employer it may be time to check your processes.

Argos has been forced to pay £2.4million to 37,000 current and former workers and also been fined £1.4million, after an investigation by HMRC.  Argos now owned by Sainsbury’s admitted that employees had not been paid for attending briefings before their shifts started and were also required to undergo security searches outside their working hours.  The government is now “naming and shaming” these companies and so far two big employers Sports Direct and Debenham’s have been found to be underpaying staff.

The National Minimum wage (NMW) is enforced by HMRC and most complaints are usually instigated by an employee or third party.  However, HMRC officers also have the power to carry out inspections at any time without providing a reason and can require employers to produce records and other information or access to determine the level of pay received by workers.

Under 25’s receive the NMW, which is currently £6.95 for 21 to 24 year-olds, and £5.55 for 18 to 20 year-olds.  The National Living Wage is for workers over the age of 25 and was introduced on 1 April 2016 and is currently £7.20 an hour rising to £7.50 in April.

The NMW is worked out at an hourly rate, but it applies to all eligible employees even if they’re not paid by the hour.  This means that however someone gets paid, they still need to work out their equivalent hourly rate to see if they’re getting the minimum wage.

There are different ways of checking that workers get the minimum wage depending on whether they are:

  • paid by the hour (known as ‘time work’)
  • paid an annual salary, under a contract for a basic number of hours each year (known as ‘salaried hours’)
  • paid by the piece – the number of things they make, or tasks they complete (known as ‘output work’)
  • paid in other ways (known as ‘unmeasured work’)

As an employer you must be wary that certain activities, even though they are not work as such, may still count as working time such as:

  • at work and required to be working, or on standby near the workplace (but don’t include rest breaks that are taken)
  • travelling in connection with work, including travelling from one work assignment to another
  • training or travelling to training

As an employer you need to be clear on your NMW obligations, if you have any questions or need guidance then let HR Revolution save you time and money, call + 44 203 538 5311 or email:

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