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05th December 2014

National Minimum Wage – 25 Employers named and shamed

National Minimum Wage – 25 Employers named and shamed25 offenders who have failed to pay the National Minimum Wage (NMW) have been named and shamed by the Government. At the top of this list are three employers whom you might expect to know better: a Museum, a Community programme and a Nursery.

It costs:

As well as needing to repay workers the £44,000 due to them these offenders may have faced £60,000 in fines. In total 25 employers are named this time around, you can find them here. Among them are many small employers. No obvious care sector employers among them this time but there have been in the past.

It is not necessarily intentional, so what goes wrong?

Many of these employers will have been paying the rate of £6.31 per hour in 2013/14 (it is now £6.50 per hour), often more, and yet have still fallen foul. Indeed, in paying a rate in excess of the NMW, complacency can catch you out! Here are some things to consider:

  • Travel time (needs to be included in domiciliary care )
  • Is attendance being required at the place of work (even if not actually working)
  • Employees who are on call
  • Deductions, say for uniforms or accommodation
  • Any unpaid time such as for training or for social outings
  • Volunteers
  • Work experience
  • Contracts for services – “workers”, not just employees, are entitled to the NMW
  • Paying by project rather than by the hour

What to do?

For each employee and each pay period (e.g. week or month):

  • Determine what pay qualifies; some elements, such as reimbursement of expenses, will not.
  • Deductions, such as for uniforms, will reduce the pay whereas there are allowances for providing accommodation that may increase effective pay.
  • Determine the hours where the employee is subject to your instructions. That has to include travel while working (although not to or from a fixed place of work), required training time, on call, etc.
  • Sum up the qualifying pay for the relevant pay period (e.g. week or month) and sum up all the hours. Dividing pay by hours will give a good estimate of your actual pay rate. If that is close to the NMW then it would be wise to examine all the above factors very carefully. It would be a shame to be caught out when you have acted responsibly in the first place.

Volunteers and work experience

Not everyone can engage volunteers; however willing they may be, and some volunteers will qualify for the NMW. This is just speculation, but it may be how the top offenders were caught out. There is good guidance here on who can and cannot engage volunteers, the terms under which such work can be offered and what can and cannot be paid.

You can also find further important detail on the NMW here.

Malcolm Martin of Employer Solutions – QCS HR Expert contributor.

*All information is correct at the time of publishing. Use of this material is subject to your acceptance of our terms and conditions.

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