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National Minimum Wage – It’s No Laughing Matter

We know that the vast majority of employers pay their employees at least the National Minimum Wage (NMW).

Some, however, are not so conscientious and HMRC has recently released some of the more bizarre excuses used by culprits guilty of not paying the legal minimum.

These included:

  • “My workers are often just on standby when there are no customers in the shop; I only pay them for when they are actually serving someone.”
  • “The National Minimum Wage does not apply to my business.”
  • “My workers like to think of themselves as being self-employed and the National Minimum Wage does not apply to people who work for themselves.”
  • “The employee was not a good worker, so I did not think they deserved to be paid the National Minimum Wage.”
  • “My employee is still learning so they are not entitled to the National Minimum Wage.”
  • “I have an agreement with my workers that I will not pay them the National Minimum Wage; they understand, and they even signed a contract to this effect.”
  • “I thought it was okay to pay young workers below the National Minimum Wage as they are not British and therefore do not have the right to be paid it.”

Although these may seem absurd, being underpaid is certainly no joke for workers and there are serious consequences for employers who flout the law. As the economy begins to reopen, HMRC is actively engaging with employees to remind them of their rights and how to complain via the GOV.UK website.

Although minimum wage underpayments are not always intentional, it is the responsibility of all employers to abide by the law. HMRC has recently named employers who have broken the NMW law in the following ways:

  • 47% wrongly deducted pay from workers’ wages, including for uniform and expenses
  • 30% failed to pay workers for all the time they had worked, such as when they worked overtime
  • 19% paid the incorrect apprenticeship rate.

The National Minimum Wage hourly rates are currently:

  • age 23 or over (National Living Wage rate): £8.91
  • age 21 to 22: £8.36
  • age 18 to 20: £6.56
  • age 16 to 17: £4.62
  • apprentice rate: £4.30

Payroll legislation is continually changing. The furlough scheme is coming to an end this month and the recent announcement about changes to National Insurance and the introduction of the new Health and Social Care Levy will add a further administrative burden to businesses.

At GWA, we have a dedicated payroll team able to deal efficiently with your entire payroll, employment and HR issues. So, if you would like to discuss how we can ensure salaries are processed correctly, please get in touch. We’re here to help.

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