We have been asked in the past who should pay National Minimum Wage? The answer, quite simply is everyone. Some employers think they are above the law when deciding what they will pay their employees. The National Minimum Wage applies to every employee in the UK regardless of the number of hours they do, what work they perform or even what age or nationality they are.
Employees may make a claim against their employer any time with the tribunal service if they believe they are being underpaid the national standards. Those employers who have been questioned and fined by HMRC have come up with some great excuses, here are just a few:
Unbelievable Excuses why Employers do not pay National Minimum Wage.
- The employee wasn’t a good worker so they didn’t deserve to be paid the National Minimum Wage. Offer a performance review meeting, do some training or discipline the employee for poor performance. Don’t under pay them.
- It’s part of UK culture not to pay young workers for the first three months as they have to prove themselves. No it is not. Although younger workers (under 25) are given a lower wage band, employers still have to adhere these minimum wage requirements.
- I thought it was ok to pay foreign workers below the National Minimum Wage. They aren’t British so don’t have the right to be paid it. Every employed person in this country, regardless of nationality, is entitled.
- She doesn’t deserve the National Minimum Wage because she only makes the tea and sweeps the floors. It doesn’t matter what an employee does as part of their job, all employees must be paid what the HMRC sets as the Minimum Wage.
- I’ve got an agreement with my workers that I won’t pay them the National Minimum Wage. They understand and have signed a contract. This is statutory employment law. Employers cannot just pick and choose whether they pay the NMW or even pay less than it.
- My accountant and I speak a different language – he doesn’t understand me and that’s why he doesn’t pay my workers the correct wages. No excuse, you, as the employer is wholly responsible for ensuring your staff are paid the legal minimum.
- My workers like to think of themselves as being self-employed and the National Minimum Wage doesn’t apply to people who work for themselves. This is a whole different issue about whether they are employees, workers or self-employed.
- My workers are often just on standby when there are no customers in the shop. I only pay them for when they’re actually serving someone. The employee is there to work, they cannot leave the shop as they are contracted to stay for on your premises for a certain amount of time. Therefore, they are paid for the hours they have to be at work and not piece work.
- My employee is still learning so they aren’t entitled to the National Minimum Wage. Unless they are an Apprentice in their first year employees are entitled to NMW. Even Apprentices must be paid a set minimum wage.
- The National Minimum Wage doesn’t apply to my business. Yes it does. It applies to every employer.
More common reasons why employers do not pay National minimum wage as cited by HMRC are:
- not paying the right rate, perhaps missing an employee’s birthday
- making deductions from wages which reduce the employee’s pay below the NMW/NLW rate
- including top ups to pay that do not qualify for NMW/NLW
- failure to classify workers correctly, so treating them as interns volunteers or self employee
- failure to include all the time a worker is working. For example, time spent shutting up shop or waiting to clear security.
What are the penalties for not paying National Minimum Wage?
The penalties imposed on employers that are in breach of the minimum wage legislation are 200% of arrears owed to workers. The maximum penalty is £20,000 per worker. The penalty is reduced by 50% if the unpaid wages and the penalty are paid within 14 days. HMRC also name and shame employers who are penalised. Those who still refuse to pay run the risk of being taken to court by HMRC.
You may also consider the impact on your reputation and future ability to recruit employees, as your details will be published in a government press release under its ‘name and shame’ policy. If you’re known for paying below the minimum wage, you’ll likely struggle to recruit and retain employees.
Further Pay Requirements from 6th April 2019
Where an employees wage varies by reference of time worked, Employers will now have to include the number of hours for which the employee is being paid on his pay slip. The change is designed to make it easier for hourly paid staff to ensure that they are paid correctly and to address any underpayments. This right to itemised statements will also extend to workers.
If you want to find out more about National Minimum Wage or any other statutory requirement, give us a call – 01706 565332.
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 565332 to discuss how we may help you.