National Minimum Wage breaches – Are You Guilty? Four Traps to Avoid ....

National Minimum Wage breaches – Are You Guilty?

Four Traps to Avoid

The National Minimum Wage is an established part of UK employment law and the rates are well publicised BUT some employers are still under-paying! The Government recently revealed that 200 200 employers, many of them large household names, have been found to be in breach of National NMW legislation? And how come this has happened “by accident”?

The answer is, that paying the National Minimum Wage (NMW) is not as easy as it sounds. Below are four common mistakes that we have come across:

Not allowing for the cost of “uniform” when calculating minimum wage. “But my staff don’t wear a uniform” I hear you say. But if you require them to wear clothing of a certain standard and colour, this counts as uniform for NMW purposes. So if you insist, for example, that staff wear black trousers and a white shirt, you have to deduct the cost of this from their wage, then work out if they are still being paid NMW. Chances are, if their rate of pay is just NMW, the cost of buying the required clothing will take them below.
Paying apprentices at the wrong rate. Don’t forget that apprentices over 19 can only be paid the apprentice rate for the first 12 months, then they have to get the NMW rate for their age.
Not paying for travel time. This often comes up in relation to the care sector. You don’t have to pay workers for time spent travelling between assignments; however, you do need to make sure that their pay is enough to meet NMW rules for the travel time. If we take the example of a worker paid £12 an hour for a 30 hours of work but not paid for 5 hours travel time. Pay for the 30 hours would be £360. However, if we take into account the unpaid travel time, the hourly rate would be £10.29 which is below the NMW for a worker aged over 23.
Salary sacrifice for pension contributions, cycle to work schemes etc. NMW is calculated after the salary sacrifice has been deducted so anyone with a pay rate on or near the minimum is likely to fall below NMW after salary sacrifice.