Last month, the Department for Business, Energy and Industrial Strategy (BEIS) published its largest ever list of National Minimum Wage offenders, naming 197 companies who owe workers arrears of pay as a result of not paying the national minimum wage. Many of the companies named owed thousands of pounds to individual workers, with the largest amount owed was by a London company, who has now paid arrears of almost £100,000 between 30 workers.
The list is released as part of its ‘Name and Shame’ scheme whereby employers will be named where, after investigation by HMRC, they have been issued with a Notice of Underpayment, have arrears of more than £100 and have not successfully appealed the notice. Since October 2013, 687 employers have been named with total arrears amounting to over £3.5 million.
To avoid appearing on this list, employers should ensure they are paying the current hourly rates and keep up with any changes to the national minimum wage, which usually happen in April or October each year. This year, the introduction of the National Living Wage may have caught out some businesses. It is now the minimum wage for employees aged 25 or over and is enforced in the same way.
There are many reasons why arrears may be owed, from deliberate non-payment of the minimum wage to errors in calculating pay. While in most cases, it is easy to confirm that workers are being paid the correct amount, ensuring that workers are being paid the national minimum wage may not always be as straightforward as it seems. A key area where issues often arise is where working time is difficult to calculate and employees are not being paid for time which should count, such as time spent on training, time spent travelling on business, being on call and in some cases even while sleeping. A recent and heavily publicised example is that of Sports Direct, which has been found to be paying below the minimum wage as a result of workers being subject to financial penalties for being late and not being paid for up to 15 minutes they are required to spend undergoing extensive searches. It is therefore important to be aware of circumstances where employees may need to be paid for time beyond their obvious working hours.
Ensuring payment is made correctly is not just important to avoid the embarrassment of being named and shamed. As well as paying the arrears due, employers who pay workers less than the minimum wage can also face financial penalties of up to £20,000 per worker and in very serious cases can be criminally prosecuted.
It therefore pays to ensure that that workers’ wage is calculated correctly.
If you would like more information on the above matter or any other employment law issue, contact our employment solicitors today.