More Government Fines and 'Naming and Shaming' Ahead of Increase to National Minimum Wage
The government has taken further action to ensure employers are paying employees the National Minimum Wage ("NMW").
Measures include a new round of fines and 'naming and shaming' of offenders in advance of the increase in the NMW on 1 April 2018.
Background
The government has long sought to enforce the NMW strictly against employers and has an arsenal of sanctions open to it to assist with this enforcement. The Department for Business, Energy and Industrial Strategy ("BEIS") works in tandem with HM Revenue and Customs to enforce the NMW.
BEIS have been granted the power to 'name and shame' companies which are not adhering to the NMW. The companies who have fallen foul of the NMW regulations are included on a public list which is posted to the government's website. Some of the most recent companies who have been subject to naming and shaming include big name restaurants Wagamamas and TGI Fridays, coffee giant Starbucks, Stoke City Football Club and fashion label Karen Millen.
HMRC can issue fines to companies in breach of up to 200% of the wage arrears, with an overall maximum penalty of £20,000 per employee. If employers refuse to pay the fine, they can face directorship bans of up to 15 years and potentially criminal sanctions.
In many instances employers make mistakes by making deductions typically during the first pay period as deposits for uniforms, even though such deposits are normally refundable upon the ending of the employment. The effect of the deduction is to bring pay below the NMW for that period. Other issues often involve the failure to pay for travel between assignments particularly in the healthcare sector, or failing to pay carers for the hours spent at the home of a service user at night time with sleeping facilities which can have the effect of breaching the NMW regulations.
Recent Developments
The NMW is set to increase again on 1 April 2018, from £7.50 per hour to £7.83 per hour. BEIS has initiated a further 'naming and shaming' round in advance of the increase. Employers who owe more than £100 will be 'named and shamed' on the government website. This could cause damage to the reputation of the business. Those organisations involved in tendering for public contracts will almost certainly find it more difficult if they have been subject to being named and shamed.
In addition to the next round of naming and shaming, BEIS have this month launched a new campaign to assist in ensuring employees are paid the NMW. The campaign encourages employees to discuss their wages with their employers, and aims to raise awareness of the NMW. In addition, Government spending of £25.3 million in 2017-8 has been promised to assist in enforcing the NMW.
Best Practice
- Employers should never make deductions from employee's wages for any reason, if there is a danger this could bring their wages down below the minimum wage
- Employers should charge for deposits on uniforms and other expenses separately and not by way of deduction
- Employers should audit their employee's salaries and ensure compliance with the NWM in advance of the 1 April increase, in order to avoid public naming and shaming and civil fines
- Employees concerned that they have not received the NMW from their employer, should consider discussing the matter with their employer in advance of the upcoming increase in the NMW, or seek legal advice.