It’s suddenly become a headline-grabbing issue that so many employers, particularly large companies with prominent brands, have been found to have been paying below the national minimum wage (NMW).
It sounds like it should be a straightforward issue – you work for a certain number of hours and you get paid for those, as set down in the contract. However, what’s been catching employers out is not understanding what constitutes ‘working time’ and what pay you can and can’t count towards the NMW.
The law requires that, on average, during the applicable ‘pay reference period’ that workers receive at or above the applicable NMW (I include the living wage in this). So, a ‘pay reference period’ is the frequency of paying wages i.e. weekly or monthly, depending on when you pay your staff. However, you cannot count any premium shift or overtime payments (e.g. time and a half on a bank holiday), non-cash benefits (like discounted or free meals), on-call allowance or tips. On the other hand you can include performance bonuses, payments for piecework or accommodation allowance (currently £6 per day, if you provide your staff with accommodation).
The likes of Sports Direct fell foul over its policy of requiring staff to be on site for their post work search protocol, which took fifteen minutes to complete. Other employers have tripped up over travel time i.e. the time it takes to get from one place of work to another (or even from their front door if the worker does not have a usual place of employment). The care sector particularly has been caught out regarding time spent completing mandatory training, taking handover from the previous shift and the now notorious ‘sleep-in shifts’.
It is now clearly settled, from a legal perspective, that all time spent performing those activities is working time and need to be paid. HMRC are out on the war path against employers who are found to be breaching this and the fines (in addition to wages owed) are steep. Ensuring that your practices are compliant is vital.
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Excuses used by businesses for not paying the full basic wage included using tips to top up their pay, making reductions to pay for a Christmas party, or making staff pay for their own uniforms.