HMRC recently “named and shamed” 200 companies for failing to pay the National Minimum Wage (NMW).  The list included some big names such as John Lewis and Body Shop as well as Holdsworth House and the now defunct Epicure bar locally.

It is important to note that many of the companies named have not deliberately underpaid their staff because the underpayment has arisen due to misunderstanding the National Minimum Wage rules.  These are the most common mistakes:

  • If a member of staff (on or close to NMW) is required to wear branded workwear AND is required to pay for it,  the cost of the workwear reduces their pay and can therefore take them below the NMW
  • If staff have to wear a specific uniform, such as black shirt and trousers AND have to pay for them personally, the cost has to be treated as a deduction from pay for NMW purposes
  • The cost of footwear can also have the effect of reducing NMW pay if there is a specific requirement, such as black shoes
  • Paying equal monthly payments rather than an hourly rate for time worked can also result in underpayment!  There will be an underpayment if 52 weeks is used as the calculation because there are actually 52.143 weeks in a year (52.286 in a leap year!)

However, if employees choose to purchase extra items of clothing or workwear, this will not count for NMW purposes.

Our HR support and advice is tailored to your specific circumstances. To find out how we can support you and your business, give us a call or drop us a line: 01484 841776 or info@penninehr.co.uk