By Sue Leathem
Partner
J R Watson & Co
ALL rates of minimum pay increase on 1 April 2018, the highest rate increasing from £7.50 to £7.83 per hour, an increase of 4.4 per cent.
National Living Wage was first introduced at £7.20 per hour, on 1 April 2016. Businesses employing lower skilled workers were unhappy because they forecast that they would find it difficult to cover the additional costs. The Government felt that the increased earnings would boost spending and the economy.
With losses of major businesses over the last two years, it might be difficult to see that this has happened.
Nevertheless, it is here to stay and employers continue to get it wrong. Minimum pay is rarely out of the news. Rates of pay are monitored by HM Revenue & Customs and they can charge a penalty of up to 200 per cent of the sums due to employees if a problem is found.
There has been considerable publicity about the cases where HM Revenue & Customs have found a problem and named and shamed the offender. Employers really have little excuse to get it wrong in the future, but no doubt some will.
It is clear that the minimum pay rate at the appropriate level for age and apprenticeships must be paid for every hour worked. The rate of pay cannot be averaged over say overtime which is paid at a higher rate. Customer tips cannot be included in the calculation of the hourly rate.
Employees should be paid for every minute they are working. Working includes meetings, training and travelling between sites. If work demands mean that they cannot take their full entitlement to breaks, they should be paid for the break time foregone.
Employers are expected to pay for work uniforms, work tools and training.
In the last few months it has become clear that payments to ‘on call employees’ are particularly difficult. If an employee is provided with sleeping accommodation on the employer’s premises, they are entitled to minimum wage for the whole of that shift, including the time sleeping. This is proving a financial nightmare for the care sector who are having to check their records for up to six years.
All benefits in kind, except accommodation, are ignored when assessing whether the minimum wage requirement has been met. Weekly pay can be reduced by up to £49 per week if accommodation is provided.
All employees are entitled to paid holiday at their usual rate of pay. If payment for work done is incorrectly calculated, the calculation of holiday pay is likely to be wrong.
Enforcing the national minimum wage rates is a Government priority and every employer should ensure that they review their policies and pay setting procedures to ensure they comply.
Sue Leathem is a partner in J R Watson & Co and can be contacted on 01604 630745.