Minimum wage non-compliance is often inadvertent, but with ‘naming and shaming’ of those who breach the National Minimum Wage (NMW) being introduced by the Government’s Business Innovation and Skills Department (BIS) last October minimum wage non-compliance can have a huge negative impact on your organisation’s reputation. If your organisation has pay levels close to the NMW, complicated pay structures or you use zero-hours contracts you may be inadvertently at risk of minimum wage non-compliance.
Some of the most common ways that employers find that they have minimum wage non-compliance are
- failing to realise that travel time between each place of work may count as working time
- expecting staff to attend training or team meetings just before or just after their paid shift starts
- deducting the cost of uniforms, training or meals without realising that you calculate NMW after making those deductions
- ignoring the fact that enhanced rates e.g. for weekend work are irrelevant when calculating NMW. NMW calculations are on basic pay rates.
- overnight working where staff sleep in eg in the care sector where staff are paid for the hours that they are awake and providing care. The time when the care worker is asleep attracts NMW
HMRC told us that prosecutions for minimum wage non-compliance are only in exceptional circumstances. It won’t come as any surprise to learn though that they take repeated non-compliance, the falsifying of records and obstructing their enquiries are factors that would make it more likely that HMRC will prosecute.
What to do?
- keep accurate and comprehensive records of pay, shifts worked and travel time
- carry out a review for yourself where your vulnerabilities may lie
- if you find that you have made errors in paying employees put a schedule of repayments in place
- re-assess the profitability of your organisation once you have reviewed for minimum wage non-compliance and whether and how you might pass on your increased costs
Metis HR is a professional HR Consultancy based in the North West of England supporting clients across the country. We specialise in providing outsourced HR services to small and medium sized businesses. Call us now on 01706 565 332 to discuss how we may help you.