26th April 2017
The Government is spending £1.7 million on an awareness campaign to make sure workers are paid what they are legally entitled to, because it seems that some of them aren’t being paid the National Living Wage.
The National Living Wage was set up last year as a means of raising the minimum wage of workers over 25 years old. It also changed the rates of the National Minimum Wage for workers between the ages of 16 and 24. It was increased in April 2017, so that currently the National Living Wage is £7.50 per hour.
By law, all workers must be paid at least £7.50 an hour if they are aged 25 years and over, or the National Minimum Wage rate relevant to their age if they are younger. Investigators from HMRC have revealed some of the worst excuses given to them by employers caught out for underpaying staff, which include:
- “The employee wasn’t a good worker so I didn’t think they deserved to be paid the National Minimum Wage.”
If your employee isn’t a good worker, they need better training and guidance. And they still need to be paid according to the National Minimum Wage.
- “It’s part of UK culture not to pay young workers for the first 3 months as they have to prove their ‘worth’ first.”
No it isn’t.
- “I thought it was ok to pay foreign workers below the National Minimum Wage as they aren’t British and therefore don’t have the right to be paid it.”
Foreign workers are still workers that need to be paid in accordance with NMW.
- “They doesn’t deserve the National Minimum Wage because they only makes the teas and sweeps the floors.”
… demonstrating that they do work, which entitles them to the National Living Wage.
- “I’ve got an agreement with my workers that I won’t pay them the National Minimum Wage; they understand and they even signed a contract to this effect.”
Regardless of contracts signed, workers still have a legal entitlement to National Living Wage.
- “My accountant and I speak a different language – he doesn’t understand me and that’s why he doesn’t pay my workers the correct wages.”
Poor communication with your accountant or payroll team is no excuse.
- “My workers like to think of themselves as being self-employed and the National Minimum Wage doesn’t apply to people who work for themselves.”
Being self employed and thinking you’re self employed are wildly different things!
- “My workers are often just on standby when there are no customers in the shop; I only pay them for when they’re actually serving someone.”
You still have to pay workers for the length of their shift and the amount they are legally entitled to.
- “My employee is still learning so they aren’t entitled to the National Minimum Wage.”
Learning on the job is an important element in many industries. You still need to pay workers what they’re entitled to.
- “The National Minimum Wage doesn’t apply to my business.”
The National Minimum Wage applies to part-time, casual labourers, agency workers, home workers paid by the number of items they make, apprentices, trainees, workers on probation, disabled workers, agricultural workers, foreign workers, seafarers, and offshore workers. It doesn’t matter how small an employer is, they still have to pay the correct minimum wage.
Some of these excuses are clearly bizarre, but some highlight a sense of ignorance on the part of some small businesses. Understanding the compliance and legislation around pay and HR is an essential part of successful payroll management. If your business is struggling to keep up to date with the latest changes, or are unsure whether they effect you, consider reaching out to payroll professionals. The best outsourced payroll providers always stay up to date with the latest compliance updates and new legislation. Their expertise in interpreting such chances helps businesses stay compliant.