…Even if you think you are paying correctly!
Wagamama and TGI Fridays are the most recent companies that have been named and shamed for failing to pay their staff the National Minimum Wage (NMW). Both companies have been fined an undisclosed figure by the Government for failure to comply with the law.
The Government have the power to fine employers up to twice the total wage shortfall, subject to a maximum of £20,000 per worker, if they do not comply with the National Minimum Wage Regulations 1996.
But how can big companies get it so wrong?
This article aims to sum up the pitfalls that other companies have fallen into, and help employers avoid hefty fines from the Government.
Wagamama ask their front-of-house staff to wear casual black jeans or a black skirt with their Wagamama branded top which is supplied by Wagamama. It was considered that asking staff to wear black was a uniform. Wagamama wrongly assumed that because the jeans or skirt were considered casual wear, they would be exempt from their responsibility to provide this for their employees.
It was concluded by HMRC that asking staff to buy their own uniform pushed the employees below NMW in their first pay cheque.
TGI Fridays encountered similar claims from staff regarding their footwear. Employees were provided with a uniform, but advised that they must wear black shoes. Again, as this was a uniform that was dictated by the employer, the employee should not be expected to fall below NMW.
Again, the cost of the shoes pushed the employees below NMW in their first pay cheque, resulting in hefty fines for TGI Fridays.
For employers who have uniforms, asking staff to pay for their uniform is not itself illegal or wrong. However, if staff are on a low hourly rate more care needs to be given to ensure that the cost of their uniform doesn’t cause the first pay cheque to fall below NMW.
Sports Direct had a very strict security process for all employees at the end of their working day. Employees were not allowed to leave the premises until they had been searched by a senior staff member. Sports Direct argued that the employees had finished their shift and so were not entitled to be paid. However, as this time was dictated by the company it was considered to be working time and thus subject to NMW. Failure to pay employees for this extra working time pushed employee wages below NMW taking into consideration the time they had actually worked and the pay they received.
Consider that if you are dictating specific times for employees, this is more than likely going to be considered working time, and therefore subject to NMW.
Many employers dictate that employees should be at work 10 – 15 minutes before work starts. This again would be dictating working times.
To avoid employees being late, but not being stung for extra wages, Opsium advises that the contracts are constructed to emphasise to staff that they must be ready and available to work at the start of their shift, not that they merely arrive on the premises for this time.
Not Keeping up to Date with Regulations
The NMW is increased every year in line with inflation. Therefore, each year employers need to be aware of how much the NMW is, and increase employees’ wages accordingly.
Some companies implement commission only contracts. These contracts can be an amazing way to incentivise their employees to earn money for their company, but they can also leave employers at risk of not abiding by the NMW regulations. In line with NMW, employees should be paid NMW for all hours worked, even if they are on commission only contracts. If the commission employees earn is more than NMW, this is fine. However, if they do not earn any commission, or commission falls below the current rate of NMW, then employees must be paid the current NMW rate.
Current legislation and Employment Law is moving to protect vulnerable low paid employees. It is worth considering any expense that you expect an employee to go to, to be able to complete their day to day work. If the employees are paid the NMW or close to it, then more emphasis will be placed on the employer to ensure that the business needs do not push the employee’s wages below NMW.
If you would like any further information or advice on NMW then please get in touch.