National Minimum Wage headaches for employers

There were plenty of big names on the Government’s ‘name and shame’ list this month for those who had been paying their workers less than National Minimum Wage – and there were a range of reasons why. If even the biggest employers have fallen foul of the rules, it is easy to see how plenty of smaller organisations may also be unaware that they could be caught out. We look at some of the key points:

Uniform

TGI Friday, Wagamama and Karen Millen were three of the biggest organisations to breach the NMW in relation to staff uniform. Workers at the companies had been told what type of clothing or footwear they were expected to wear, and as such, under the rules the employers were effectively requiring the workers to pay for the uniform. For example, although Wagamama provided staff with T-shirts, they were required to be worn with a black skirt or trousers, and this caused a NMW underpayment, because staff should not have had to bear the cost of purchasing those items. TGI Friday expected staff to wear black shoes, and again staff should have been reimbursed. Karen Millen asked staff to wear the brand’s clothes, but did not reimburse them for the costs. All three companies have now updated their uniform policies.

Accommodation

Marriott Hotels was another organisation named and shamed this month, with a total underpayment of £71,723, much of which related to overnight accommodation for workers. Accommodation is a perennial cause of underpayment, particularly in the hospitality sector, because the NMW rules state that only a set ‘accommodation offset’ can be charged for each day when accommodation is provided. If a worker is charged more than the rules allow, then this may take them below the relevant NMW level. Gas and electricity and laundry charges are also counted for this purpose.

Additional work

Employers are still getting caught out for underpayments when they have asked staff to attend meetings or training in addition to their working hours, or if workers are required to arrive early for their shift. For example, in 2017 Argos was named and shamed for requiring workers to attend unpaid briefings and undergo security checks. When staff are being paid only a small amount above NMW, it is easy for these things to create an underpayment.

Recovering deductions

Arcadis, a large design and consultancy organisation, was named and shamed as a result of recovering training costs from two departing employees. The deductions took the workers below NMW. Although from the sounds of things the company had a signed agreement from the staff members entitling it to recover the monies under the terms of a training agreement, they were not entitled to take the employees’ pay below NMW.

Similarly, another area where Marriott got themselves into difficulty was where they deducted charges for late-night taxis from workers, which took them below NMW levels.

 

These cases illustrate that the National Minimum Wage rules can be trickier to apply than they seem, and there are plenty of traps for the unwary! We have helped a number of employers who have faced NMW investigations, but obviously it is better if you can avoid getting to that stage. If you think you may be affected by any of the issues highlighted here, do get in touch for details of how we can help.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.