No way around the National Minimum Wage
The National Living Wage was increased to £7.50 per hour on April 1st 2017, along with increases in the National Minimum Wage It’s not an April fools, in fact it’s a very serious business. Companies failing in their obligations can be forced to repay any shortfall and face a hefty financial penalty.
Naming and shaming
Since 2013, the Government has employed a naming and shaming scheme to highlight underpayment. Stiff fines and even potential criminal prosecution have seen the worst offending businesses suffer financial damage, as well as a bruised reputation.
In total, over 1,000 employers have been named, with payment arrears of more than £4.5 million. And according to Business Minister, Margot James, the policy isn’t going to stop any time soon. She said, “We’ll continue to crack down on those who ignore the law.”
The penalties you face
On top of repaying arrears, if you’re found to be breaking the law, you could face a fine up to £20,000 per worker. It’s a fine that can certainly add up, as Debenhams found out. The high street giant was found to be short changing almost 12,000 workers, and as well as repaying £999,233; the business had to hand over £800,000 to HMRC.
And if it can happen to a company like Debenhams, it can happen to you. It’s been made simpler than ever for HMRC to investigate and enforce each and every case.
Knowing your obligations
So how can you be sure you’re doing everything you should be? Well, in simple terms, you need to know what each of your employees should get, according to their individual circumstances. Then you need to stay on top of changes to the law, so you don’t get caught out.
There are also fewer excuses than ever to help you avoid prosecution. Using tips to top up pay isn’t allowed. Neither is docking pay to contribute to a Christmas party, or making staff buy their own uniform. Try any of those tactics and you’ll be on a fast track to a damaged reputation.
How prosecution could affect you
Arrears are the least of your worries, too. Not paying the National Minimum Wage, and having your details in the public domain for all to see means:
- A severely damaged reputation
- Employees leaving
- Business instability caused by replacing experienced staff
- Integrity questioned by other businesses and potential employees
Common errors, hints and tips
Although it might ordinarily be the big companies who appear on the top 100 name and shame list, smaller businesses are even more likely to fall foul of the law through being ill-informed or out-dated. One of the more common errors is not checking or keeping track of employment status. Several recent case law decisions have shown ‘self-employed contractors’ to actually be workers. This means that they are entitled to the National Living/Minimum Wage. Employers also need to be aware of the amount each individual employee is entitled to. For a start, that means knowing who is 25 or over.
Here are a few hints and tips to consider:
- Make sure you review contracts regularly
- Keep up to date on any law changes
- Make sure you have the right contracts
- Seek professional advice
If you’re at all unsure about who you should be paying what, make sure you consult a professional to help with Employment Law and HR. To get a tailored, uncomplicated solution, find out about Jelf Risk Management at jelfgroup.com.
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