The issue of employees being paid less than the National Minimum Wage has been highlighted following reports that a Sunday Times reporter who got a job at a Leicester garment factory was told to expect pay between £3.50 and £4.00 – less than half what someone aged 25 and over is entitled to.
So, what are the current national minimum wage (NMW) rates and what are some of the areas where employers commonly make mistakes?
The NMW rates increased on 1st April 2020. The rates per hour are currently:
- Workers aged 25 and over – £8.72
- Workers aged 21 to 24 – £8.20
- Workers aged 18 to 20 – £6.45
- Workers aged 16 and 17 – £4.55
- Apprentices under 19 and those aged 19 and over in the first 12 months of their apprenticeship – £4.15
Whilst most employers do wish to comply with the law when it comes to paying at least the NMW, it can be easy to make mistakes. Some of the more common ones to watch out for are:
- Making deductions in respect of ‘expenditure in connection with employment’ such as the purchase of uniforms without realising that this will reduce the amount of the total earnings for national minimum wage purposes. This can mean that a worker does not receive the NMW pay they are entitled to.
- Inadvertently underpaying apprentices. Employers need to keep an eye on the age of apprentices who may become entitled to a higher age related rate of NMW pay during their apprenticeship. For example, an employee halfway through a three year apprenticeship turns 19, they will become entitled to be paid the higher rate of pay related to their age rather than the apprentice rate. This is because the NMW apprentice rate can be paid to those who are aged 19 and over only if they are in the first 12 months of their apprenticeship.
- Failing to pay travel time where this is required by the NMW regulations. Travelling on business during normal working hours is treated as working time for the purposes of the NMW rules unless the travelling is between the worker’s home and their normal place or work or the worker’s home and an assignment.
If an employee in your organisation raises a complaint that they are being paid less than the NMW for whatever reason, it’s important that the matter is addressed promptly and appropriately. In most cases, this will be via your organisation’s grievance procedure. You should seek advice on the facts of your case from Kingfisher Professional Services Ltd before taking action.
It’s important for employers to bear in mind that an employee who does not receive the NMW is entitled to bring claims for unlawful deduction from wages or breach of contract to an employment tribunal. Furthermore, employees should not be dismissed or subjected to a detriment because they have raised an allegation of underpayment as they can complain to an employment tribunal if this occurs.
It’s also important for employers to be aware that National Minimum Wage compliance is enforced by HMRC as well. They have powers to take measures such as serving notices of underpayment, “naming and shaming employers”, recovering underpayments through tribunals or civil courts and criminal prosecutions.
It’s important for employers to get it right when it comes to paying employees the NMW.
If you have an employment matter you would like assistance with, please do not hesitate to contact Kingfisher Professional Services Ltd as we are happy to help.