Naming and Shaming... Those Who Don't Pay the National Minimum Wage
- AuthorShan Evans
Employers must pay their staff no less than the National Minimum Wage (NMW) rates. Otherwise, they open themselves up to the risk of claims, financial penalties and “naming and shaming” by HMRC.
It has been reported that 10 firms in Wales have failed to pay the NMW. There are likely to be many others who have not been detected by HMRC – could your business be one of them?
It is often the case that a failure to pay the NMW is unintentional on the part of the employer, due to a genuine error or a misunderstanding of the regulations which govern the NMW.
However, failure to do so can cause reputational damage – deterring talented candidates from seeking to join an organisation and impacting customers’ impression of a business. In our Covid-era, there is an increasing social consciousness. This can translate into spending their money with only the “good” businesses who uphold their values.
There are 5 different NMW hourly rates, depending on age. Briefly these are:
- National Living Wage – aged 25 or over - £8.91
- Standard (adult) rate – aged between 21 and 24 – £8.36
- Development rate – aged between 18 and 20 – £6.56
- Young workers rate - under 18 but above compulsory school age and not an apprentice - £4.62
- Apprentice rate – apprentices aged under 19 or over but in their first year- £4.30
Determining whether the correct NMW rate has been paid can be complex, depending on the pay reference period, the type of work undertaken and hours worked. This can be particularly difficult if you administer your payroll in-house without the assistance of a payroll clerk or an accountant. It is also important to give consideration to time undertaken by staff for training and also for waiting time, sleep in and on call in some industries (such as the care sector) without inadvertently paying less than the NMW.
Employers must also keep records for inspection by HMRC evidencing that the NMW has been paid.
The requirement to pay NMW can also catch employers unaware, for example, when undertaking recruitment exercises which require candidates to perform tasks without pay. Whilst there are no hard and fast rules around this, any task lasting more than one day is likely to attract payment for at least the national minimum wage rates.