National Minimum Wage – The Current Situation

The National Minimum Wage has been the focus of many legal cases recently, with everything from sleep-in shifts and whistleblowing, to national naming and shaming for firms failing to pay the NMW.

With so much going on, it can be easy to lose track of what you need to be aware of, and what the latest ruling is. So, here is a quick rundown of all decisions, deadlines and data you need to be aware of:

Sleep-in shifts

A ruling on 13th July 2018 stated that employees are not entitled to the NMW if they are working a ‘sleep-in’ shift, unless they are actually working. The ruling marked a dramatic turnaround, as previous cases of a similar nature had ruled in favour of the employee. Employers, particularly those working in the care sector, breathed a sigh of relief when the ruling was announced. However, it is worth bating your breath, as an appeal to the ruling has already been put forward, and the decision could be overturned in the near future.

Whistleblowing

It was recently reported by HMRC that whistleblowing regarding the NMW HAS increased by 134% since last year. If that figure frightens you—it should—employers can receive fines of up to 200% in arrears for NMW underpayments. Perhaps even worse than the financial damage, is the reputational damage. Some big names were called out in the last round of naming and shaming. No firm is exempt, no matter its size or status.

Naming & shaming

Public naming and shaming of employers failing to pay the NMW has now occurred twice in one year. This kind of press fails to take into account that most underpayments are down to simple errors and are not malicious in nature.

Nearly 240 employers were called out in July, and approximately £1.4 million was paid out to 22,400 workers.

Paying the National Minimum Wage

To avoid NMW whistleblowing and subsequent naming and shaming, take care when reviewing your pay systems.  A common reason employers get caught out is that they deduct uniforms and other expenses from employees’ wages, dipping them below the NMW. Another common reason is failure to pay for travel time.

NMW rates change every April; make sure you comply with the updated rates and look out for any errors. This is a good time to conduct a salary benchmarking review, to make sure your pay rates are both compliant and competitive.