New National Minimum Rates announced

Effective from April 2018, the Chancellor Philip Hammond confirmed in his Autumn budget, national minimum wage increases and a new scheme affecting care sector employers who may have underpaid their employees.

New National Minimum Wage Rates

In line with the intention for the national minimum wage to increase to £9 per hour from 2020, it will increase from £7.50 to £7.83, representing a 4.4 percent uplift.  In practical terms, this will mean a pay rise of around £600 per year for a full time worker.

The other rates will increase as follows:

  • Workers aged 21-24 from £7.05 to £7.38 per hour
  • Workers aged 18-20 from £5.60 to £5.90 per hour
  • Workers aged 16-17 from £4.05 to £4.20 per hour
  • Apprentice rate from £3.50 to £3.70 per hour

The Budget was also used to announce a review of the flexibility in the way organisations may use their apprenticeship levy (large companies have been required to pay this levy since April 2017 which they can then use to fund apprenticeships) and a National Retraining Scheme to support worker’s career development.

Care employers advised to correct minimum wage wage under payments

A new scheme to encourage companies in the care sector to make good any minimum wage underpayments was launched on 1st November 2017.

Recent employment tribunal judgements have shifted a focus onto a companies minimum wage obligations in the specific area of sleep-in shifts.  HMRC’s interpretation of the legislation, in common circumstances, requires that all hours of a sleep-in shift attract the minimum wage, regardless of whether the worker is asleep.

In order to soften the impact of these decisions on social care companies, the Social Care Compliance Scheme (SCCS) will see any underpayments corrected but remove the enforcement measures applied to companies that are found to have underpaid their workers. Employers have until the end of 2018 to join up to the scheme.

Committees publish draft bill on gig economy workers

A joint draft bill containing enhanced proctections for gig economy workers has been published by two government committees.

The propsal focuses on giving individuals more certainty about their status by providing an automatic assumption of “worker” status, meaning that it would be for the company to prove otherwise at employment tribunal.  This would also mean that these workers would be entitled to certain employment rights from day one.

Some recommendations from the Taylor Report are also included in the Bill, such as considerations of a higher national minimum wage rate for those on zero hour contracts. The government is yet to provide its full response to the review and this Bill will add more pressure on the government to take action.

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A version of this article first appeared on CIPD HR-inform.

Employers’ bizarre excuses for failing to pay minimum wage

I find this unbelievable in 2017!  Please make sure you are not an employer to be accused of this and keep on top of Employment law in your workplace.

One boss failed to pay the minimum wage to a worker because “she only makes the teas” and that is just one of a string of bizarre excuses by employers.

Another argued their case for not paying the legal minimum, saying that a member of staff “wasn’t a good worker”, while one said employees should “prove their worth”.

These excuses, heard by HM Revenue and Customs (HMRC), were published as part of a government awareness campaign.

It is encouraging people to check their wages and warning employers of fines.

Business Minister Margot James said: “There are no excuses for underpaying staff what they are legally entitled to”.

“This campaign will raise awareness among the lowest paid in society about what they must legally receive and I would encourage anyone who thinks they may be paid less to contact Acas as soon as possible.”

All workers must be paid at least £7.20 an hour if they are aged 25 and over, in order to comply with the National Living Wage.

The National Minimum Wage means that:

  • Workers aged 21 to 24 should receive a legal minimum of £6.95 an hour
  • Staff aged 18 to 20 should get at least £5.55 an hour
  • Pay should be at least £4 an hour for the under-18s
  • Apprentices should receive a minimum of £3.40 an hour

Among the cases investigated by HMRC was a boss who thought it was acceptable to pay foreign staff below the statutory rate.

I also heard from one employer who said: “She doesn’t deserve the national minimum wage because she only makes the teas and sweeps the floors.”

Another said: “My accountant and I speak a different language – he doesn’t understand me and that’s why he doesn’t pay my workers the correct wages.”

Len McCluskey, general secretary of the Unite union, said: “Too often, companies are skimming their profits out of the pockets of their workforce. It is a continuing reminder that, for too many working people, work in this country just does not pay.

“While it is good to see the rogues being held to account in some way, the fines can only ever be a rap on the knuckles.”

Stewart Gee, of the conciliation service Acas, said: “We welcome this new government awareness campaign, as there are no good excuses for not paying staff what they are legally entitled to.

“Employers are breaking the law if they do not pay the national minimum wage and businesses face a maximum fine of £20,000 per worker for not paying the national living wage. Failure to pay the national living wage could also result in a company director being banned for up to 15 years.”

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The Living Wage Outrage!

So it’s been a little over a month since we saw the introduction of the National Living Wage but instead of praise for a better bank balance for employees,  there’s been a backlash of outrage against some “tight fisted” employers that have found a way around the legislation that has resulted in some actually being worse off… #livingwageoutrage

So how have they done this? Well, not that I want to name and shame but, let’s take the example being very poorly set by B&Q, they have made changes to employees contracts which take away additional “premium pay” for Sundays and Bank holidays, which used to be set at time and half and double time respectively.  The new contracts are getting rid of some long standing bonuses of around 6% AND those that don’t sign these new terms can have their employment terminated and lose any accrued bonus.  These changes now mean that some of their staff are out of pocket by hundreds or even thousands of pounds!  Would you sign up to that??

They, along with other companies guilty of removing premium pay packages, have said that they have made the changes to be fair across the board and that some employees will be better off under the new terms.  Unfortunately others will not and as one whistle-blower said “this is a kick in the teeth being loyal”.

Some other big name companies are clawing back the pennies by revoking perks previously offered to some staff to be able to give the increase to others, here are some examples:

EAT are taking away the 30 minute paid breaks, which sees some employees £936 worse off, however they have extended the £7.20 minimum wage to all staff regardless of age.

Zizzi have reduced their choice of free food for some employees resulting in a hit of £520 a year, but have said they now make discounted food available to all staff.

Café Nero have taken away a free panini, yes really a simple free panini, which sees their employees worse off by £364 over the year.

George Osborne has commented “this is not in the spirit of this law, this is not how it was intended.”  However, he must have seen it coming… it was predicted that to cover the extra wage bill, an additional £3 billion pounds a year would need to be found from somewhere and that in fact 60,000 jobs could be lost by 2020.

But while some giveth just to taketh away.   Aldi and Lidl have really stepped up and in fact increased their wage to £8.40ph for all staff, saying that the best way to maintain profitability and make these increases work, is to make every one of those hours for every employee as productive as possible, and I think that’s a great example to set.

Do you want to be an employer like Aldi or Lidl, but just don’t know how to boost productivity? Get in touch and let us see where we can help. #livingwageoutrage | |

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Major employment law changes in 2016

Major employment law changes in 2016 – a CIPD Update

Following the election in May 2015, many of the announcements made by Government will start to come into force in 2016, the highlight of these being the new National Living Wage comes into affect from April, which is expected to affect half of all employees.

Another pay issue is to be addressed with legislation is that large organisations will be required to publish gender pay gap reports, including bonus payments. Additionally tax-free termination payments may also become subject to tax following a consultation last year by the Office of Tax Simplification.

If passed by Parliament, bills (see below) will bring changes to strike laws, use of the term ‘apprenticeship’, exit payments for public sector workers, and employing overseas workers.

Consultations expected this year include proposals for working parents with children aged three to four to receive 30 hours of free childcare, and working grandparents to access shared parental leave to care for grandchildren.

In January

  • Regulations giving zero hours workers the right not to be unfairly dismissed or subjected to a detriment for failing to comply with an exclusivity clause, and to claim compensation – come into force 11 January.

In April

  • The new National Living Wage comes in to force. The minimum wage for workers age 25 and over will be £7.20 – from 1 April.
  • The National Minimum Wage amendment regulations also double the financial penalties if employers are found to have paid less than the minimum – from 1 April.
  • Statutory rates of maternity allowance and statutory maternity pay (SMP), statutory paternity pay (SPP), statutory adoption pay (SAP) and statutory sick pay (SPP) usually increase in April each year. The Government has announced that rates will not be increased this April.
  • Public sector employees will be required to repay a tapering proportion of a ‘qualifying exit payment’ if they return to the public sector within a period of 12 months under regulations – expected to come into force on 1 April. A £95,000 cap on the total value of exit payments for public sector workers will also be introduced, but no date has yet been given for its implementation.

Employment-related Acts and Bills

  • The Trade Union Bill introduced on 15 July 2015 continues its passage through Parliament. It will reform strike laws in Great Britain.
  • The Enterprise Bill introduced on 16 September 2015 continues its passage through Parliament. It includes provisions on apprenticeships and capping exit payments for public sector workers (see above).
  • The Immigration Bill introduced on 17 September 2015 continues its passage through Parliament. It contains more provisions on illegal working, the introduction of a skills charge and a new duty on public authorities to ensure that everyone who works for them in a customer-facing role speaks fluent English.
  • Plans for a Counter-Extremism Bill were announced in the Queen’s Speech and will enable employers to check whether an individual is an extremist and bar them from working with children.

Consultations and reviews

The Ministry of Justice is currently carrying out its commitment to review the impact of employment tribunal fees. The review was announced in summer 2015 and is continuing.

European developments

  • Consolidation of worker information and consultation directives – The European Commission consulted with the social partners on the possible consolidation of three directives: Collective Redundancies, Acquired Rights and Information and Consultation of Workers. The consultation ended on 30 June 2015.
  • Data Protection Directive – final agreement was reached in December 2015 between the Commission, European Parliament and European Council on comprehensive reform of the Directive. The revisions are expected to be formally adopted by the European Parliament and Council and the new rules will apply two years after that date.
  • The Free Movement of Workers Directive – in April 2014, the EU Council of Ministers adopted an enforcement directive to facilitate the free movement of workers in the EU. Member states have two years to implement it at national level.
  • The Posted Workers Directive – is intended to stop worker abuse and ensure that posted workers enjoy their rights relating to holiday and pay.  The Council of Ministers adopted the Directive in May 2014; member states have just over two years to implement it in their national legislation. The UK Government carried out a consultation in 2015 on how it will comply.
  • Working Time Directive review – following a second consultation, the social partners expressed interest in negotiating on the review. Further talks were held but no agreement was reached. In December 2014 the European Commission published an online public consultation on the review which closed in March 2015.

Taken from CIPD, thank you to them.

Would you be on the Naming and Shaming List??

In 2013 the Government introduced a “naming and shaming” scheme that gave the Department for Business, Innovation and Skills the power to name companies that owe more than £100 to staff that have been paid less than the minimum wage.

You may have seen some big brand names in the news recently that have had exactly that happen to them as a percentage of their staff were not being paid in line with the minimum wage due to one reason or another, but they are not alone!

The list currently has 115 companies named on it, although undoubtedly there are many many more, owing a total of £389,000. What is even more shocking is that 4 of the top 5 companies alone owe a staggering £84,000 to just 38 employees, now that is one big oversight!

We don’t want your company to be put on the list, so here is a recap of what you should be paying:

By law ALL workers must be paid the National Minimum Wage which is currently:

£6.70 per hour for adults, £5.30 per hour for 18-20 year olds and £3.87 per hour for 16-17 year olds. 

Something worth noting is that the company that hit the headlines claimed the problem was caused by the firm ‘unintentionally’ failing to take into account clothing which its minimum-wage staff were made to buy to wear at work. As staff must wear outfits by the brands, which they can buy at a 25 per cent discount, those on the minimum wage had their total earnings pushed under the legal threshold. They now receive a clothing allowance!

If you have any doubts whether your staff are being paid correctly or if there are any circumstances that may change their earnings, get in touch now for advice. | |

Or check out the national minimum wage calculator on the Government website