What has happened?
Recently, the government has confirmed that over 200 companies have been fined nearly £7m for failing to pay national minimum wage. These breaches took place throughout the last decade, with approximately 63,000 workers needing to be reimbursed as a result.
The employers underpaid their staff in numerous ways:
- 39% deducted wages from a workers’ pay;
- 39% failed to pay workers correctly;
- 21% failed to pay the correct apprenticeship rate.
Amongst the 203 companies, Argos, M&S, Lloyds Pharmacy and WH Smith have been named for breaching the law between 2017-1019.
The fact that such large companies are getting into trouble probably shows that the rules are not straightforward as much as it shows that employers are careless. See for example our articles here and here.
WH Smith owed over £1m to 17,600 employees after what they claimed to be the result of a misinterpretation of the rules about reimbursement for uniforms. However, they said it was rectified immediately and all colleagues were reimbursed.
The government also said that M&S failed to pay over £ to 5,363 workers. M&S maintain that none of their staff were ever underpaid. They say it was an error in paying temporary staff on time, as per the national minimum wage regulations.
Lloyd’s Pharmacy failed to pay £903,000 to 7,916 workers, with Sainsbury’s following suit and having to repay 480,093.58 to 10,399 workers.
Although most companies are claiming that these underpayments are a genuine mistake, the government says that there is ‘no excuse for underpaying workers.’
What is the National Minimum Wage?
The national minimum wage is applicable to under 23’s, with the national living wage applicable to those over 23. In practice, we call both the National Minimum Wage. In April, the figures rose by 9.7% and are as follows:
- Age over 23: £10.42;
- Age 21-22: £10.18;
- Age 18 to 20: £7.49;
- Under 18: £5.28;
- Apprentice: £5.28.
Each year, the rates are set by the government, on advice from the Low Pay Commission.
‘Real Living Wage’
Whilst the national minimum wage is designed to cover essential costs, the Living Wage Foundation calculates a (controversially) more realistic wage based on the cost of living. Around 12,000 companies voluntarily pay their employees the Living Wage, with over 400,000 employees benefiting. Some of these employers include big household names like Nationwide and Google, alongside plenty of SMEs.
It is currently at £11.90 for London-based workers and £10.90 for elsewhere in the UK. It applies only to workers over 18.
What if employers aren’t paying the national minimum wage?
It is a requirement, by law, that employers are paying national minimum wage according to age. They must also keep up to date pay records and provide them when requested. If an employer is not paying the correct amount, there are a few ways it can be resolved.
Firstly, pay related issues can often be resolved quickly with an informal chat; it may be a miscalculation or mistake that needs bringing attention to, so once the employer is aware they can remedy it.
However, if this doesn’t work, or if it isn’t an option, it is possible to raise a grievance about the issue and resolve the matter without the need of legal action. If this doesn’t work, then the next step is to complain to HMRC, or make a claim to an employment tribunal.
Complaints to HMRC can be anonymous, and can be made by a third-party such as a friend or family member. HMRC will then order the employer to pay back the money owed. They may also issue them a fine or take legal action including criminal proceedings against them.
To make a claim to the employment tribunal, employees have three months minus one day since the latest deduction to bring the claim. An employee cannot take the same issue through two different legal proceedings, so they need to either choose to do this, or make a complaint to HMRC.
Image used under CC courtesy of Mike Lawrence