Are you paying some of your employees the lower limit amounts of the National Minimum or Living Wage? If so, there are many traps that you need to avoid.
The National Minimum and the National Living Wage amounts denote the lowest sum you can pay your employees per hour. They’re there to guarantee a standard of living for the lowest paid in our society.
Sensible and decent employers won’t even consider paying below these figures. Why? Because the consequences for them and their staff are just too damning.
Not paying the minimum?
But some businesses still get it wrong and fail to pay the minimum. And not just small businesses either – companies of all sizes are guilty. Much of the time it’s down to them misunderstanding the rules, rather than deliberately lowering the wages of their hardworking employees.
When wages are so close to the wire, it limits the buffer between paying and not paying employees statutory entitlements. So, let’s discuss some of the most common pitfalls.
Common minimum wage traps
Some retailers require their staff to adhere to a specific dress code e.g. black t-shirts. But do the expenses they incur to comply with these rules push them below the national minimum? Could this be extended to the cost of purchasing generic office wear? Any dress code that imposes expenses on the part of the employee could be caught out.
The hospitality business hosts some of the biggest minimum wage offenders. Tipping is often cited as a reason for this and some restaurants use tips to top up their employees’ wages. This isn’t allowed and hasn’t been since 2009.
Due to the cost of renting a space in a salon, workers in the hair and beauty industry are also commonly found to be paid below the minimum wage.
Travel time, where mobile workers are travelling between home and sites or appointments for their first and last appointment of the day, may be one to watch for the future. Whilst we now know this is working time, it does not currently need to be paid time. Do watch this space as if this changes, failing to pay staff their due travel time could dip their pay below the legal limit. This won’t apply to those that have a permanent place of work i.e. office workers, however lengthy the commute.
We are here to support you
Fines are heavy for businesses that get it wrong and prosecutions are common. Guilty businesses should also prepare for a public backlash when the Government names and shames them. Many of the businesses caught out often aren’t purposely paying below the national rates. They are simply unaware or don’t have the proper checking processes in place to identify errors.
If you are ever unsure about the National Minimum and the National Living Wage, it is essential to seek support. The HR Dept is always here to help, so contact us today to ensure that your business gets it right.