Employers are under an obligation to pay National Minimum Wage (NMW).
The NMW is the UK’s pay floor designed to protect as many low-paid workers as possible without hurting jobs or the economy. It is set annually by the Government on the basis of recommendations from the Low Pay Commission: an independent body of employers, unions and experts.
The Government has tightened its watch on employers short-changing its staff and last December named and shamed the worst offenders including Tesco, Pizza Hut and Superdrug.
Almost 140 companies investigated between 2016 and 2018 failed to pay £6.7m to more than 95,000 workers.
Joan Pettingill, Head of Employment Law & HR Services at Wake Smith Solicitors looks at the common pitfalls to avoid.
“A common tripping point for employers is that often insufficient records are kept showing HMRC inspectors what has been paid.
“Employees must be able to calculate their pay and time worked properly.
“It’s not always easy to do this and this is where mistakes can easily be made by employers. All time worked must be paid by employers and not paying for working time is a common issue.
“The relevant rate of pay must be at least the NMW or National Living Wage (NLW) in a case of workers aged 25 years old or more in any pay reference period (PRP).
“Another tricky consideration to bear in mind is that calculating the correct rate of pay isn’t as simple as averaging pay over several pay reference periods and that pay reference periods cannot be more than a calendar month long.”
The government sets a minimum amount employees must get paid on average for the hours worked. This is called the National Minimum Wage (NMW) or the National Living Wage (NLW) if aged 25 or over.
Current rates, due to be reviewed next April, depend on your age and whether you're an apprentice but an apprentice earns £4.15, under 18 £4.55, 18-20 £6.45, 21-24 £8.20 and 25 and over £8.72.
So what are some common pitfalls and how can employers avoid them?
With significant fines as well as an obligation to repay shortfalls as well as the damage to reputation if an employer is named and shamed, how can an employer spot which time is working time and should be paid for?
Joan added: “Firstly, remember that time spent getting ready to work, whether that is getting changed into uniform on site or having a shower after work before changing back into non uniform ordinary clothes, should be paid for as should time passing security checks.
“Small fractions of time, a few minutes here and a few minutes there, can quickly add up and should potentially be paid for.
“Adding up these small portions of time can come to a large sum of money when all the small portions of time are added up over numerous days and weeks and this is what HMRC inspectors look out for.
“During lockdowns, many employers will run shift systems of “A” and “B” team staff or have different shift systems in place.
“Time spent by workers handing over work from one shift to another can count as working time that should be paid for.
“Similarly, time spent getting ready to open up or shutting a store at the end of the day or locking up can count as working time.
“Some employers have penalty systems that deduct pay from pay packets if a worker is late onto their shift. Time not worked doesn’t have to be paid for, but be careful not to deduct so much time as a penalty that you accidentally underpay for that particular pay period.
“Team meetings outside of normal working hours should also be paid for.
“Time spent waiting for meetings to start or spent waiting for a customer to arrive might also count as working time and if computers have crashed, then time spent waiting for them to power up and reboot again may also be claimed as working time.
“Staff, particularly in the care sector who travel a lot between visits, should have their travel time paid for, but not their time spent commuting at the start or end of the day. It really is a minefield.
“Travel between customers or business projects or assignments should also be looked at carefully to avoid errors.
“Also in the care sector staff might be required to sleep in during a shift. An important supreme court decision is awaited on this at the moment and we’ll bring you more details when the judgment is known.
“Whether undertaking training either at work or remotely from home during a lockdown, if that training is mandatory then it should also be counted as paid working time.
“Employers need to be careful not to trip up by paying for training time in the wrong pay reference period, for example with the training happening in one week but then paying for the training time in another week, as that can also result in inadvertent under payments.”
For help with all your working time questions, HMRC NMW inspections and all employment law queries, please contact Joan Pettingill at [email protected] or call 0114 224 2087.
