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18th January 2017

“She only makes the tea” – National Minimum Wage excuses

“She only makes the tea” - National Minimum Wage excuses

This week the Department for Business, Energy & Industrial Strategy’s (BEIS) has released a shocking list of the ten most bizarre excuses used by employers who have been caught paying their workers less than the National Minimum Wage (“NMW”), or the National Living Wage (“NLW”).

The excuses have been revealed by HMRC investigators. Some of the best worst excuses include:

“She doesn’t deserve the National Minimum Wage because she only makes the teas and sweeps the floors”

“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”

“My workers are often just on standby when there are no customers in the shop; I only pay them for when they’re actually serving someone”

Find the full list at https://www.gov.uk/government/news/revealed-most-bizarre-excuses-for-underpaying-staff-the-national-minimum-wage

It is not clear whether the excuses for underpayment are the product of a conscious refusal to adhere to NWM rules or if they are simply the result of general ignorance. However, as Business Minister Margot James rightly pointed out – “there are no excuses for underpaying staff what they are legally entitled to.” Ignorance is not an excuse.

The press release coincides with the launch of a new £1.7 million campaign to raise awareness amongst the UK’s lowest-paid workers about the current NMW/NLW rates and what workers are legally entitled to receive from their employers. Workers will also be encouraged to take matters into their own hands by checking that their own pay is in line with their legal entitlement to NLW and to take action where they think they may be paid less. Consequently, there may be an increase of reports of non-compliance by newly equipped workers to HMRC; who will then be able to investigate reports of underpayment.

Employers should be aware that HMRC officers can also carry out inspections at any time without any specific reason. HMRC has been known to target particularly low-paying sectors e.g. health and social care .

Employers can face civil sanctions for failing to pay in line with NMW/NLW and could be issued with a ‘Notice of Underpayment’ requiring them to pay back any arrears immediately, in addition to a fine from HMRC. It is also a criminal offence for employers not to pay someone NMW/NLW or to fail to keep records/provide false records.

Employers can also be named and shamed by the government, through a scheme introduced in October 2013. The last report was in February 2016, when the government released a list of 92 companies who, collectively, had underpaid their workers a total of £1,873, 712. The social care sector was noted as one of the sectors covered by the report.

Current rates specify that, by law, all workers must be paid a minimum of £7.20 per hours if they are aged 25 years or over, or the NMW relevant to their age if they are younger.

However, the rates are set to change on 1st April 2017. From 1st April 2017, the NLW rate for those aged 25 years and over will increase by 30p to £7.50 per hour and for the NMW:

  • The rate for 21 to 24-year-olds will increase by 10p to £7.05 per hour.
  • The rate for 18 to 20-year-olds will increase by 5 to £5.60 per hour.
  • The rate for 16 to 17-year-olds will increase by 5p to £4.05 per hour.
  • The apprentice rate will increase by 10p to £3.50 per hour.

Now is the time to make sure that you are compliant in order to avoid any civil and/or criminal sanctions, not to mention the damage to your reputation in the event that you are named and shamed by the government.

For more information visit https://www.gov.uk/national-minimum-wage/what-is-the-minimum-wage or the ACAS website.

*All information is correct at the time of publishing

Gillian Hanson

Employment Law Specialist

Gillian is one of our Employment Law Specialists from Napthens Solicitors. Read more

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