Are you sure you aren’t paying below minimum wage for 2024/25?
More than 200 employers were called out in 2023 for failing to pay staff the National Minimum Wage (NMW). These employers, who were named and shamed by HMRC, were ordered to repay workers and faced penalties of almost £7 million after breaches of the law affected 63,000 employees. Minimum wage 2024/25 for employees over 21 years old is now £11.44
Statistics about NMW failures
According to an investigation by HMRC carried out between 2015 and 2023,
39% of employees deducted pay from workers’ wages
39% of employers failed to pay workers correctly for their working time
21% of employers paid their apprentices the incorrect rate of pay.
11% of employers paid the incorrect rate based on employee age or following annual NMW increases.
Real-life examples of failures to pay minimum wage
Most employers know that paying employees below minimum wage is not only unacceptable but also unlawful. However, are you sure that you aren’t inadvertently paying less because of other requirements you’re placing on your staff?
Extra duties for nursery staff
Nursery staff were required to attend two parents’ evenings per year but were not being paid for the extra hours. Although, on paper, the staff received the National Minimum wage per hour, once the unpaid hours were considered, they were no longer on minimum wage.
Loans for garage staff
Employees in a garage were allowed to spread the costs of a car repair by making repayments direct from their wages. As the deductions took their salaries below minimum wage, this practice was unacceptable.
Staff expected to pay for work clothing
Wagamamas gave their staff T-shirts with logos to wear while working. They insisted that trousers or skirts must be black but did not provide the clothes nor any allowance for them. As a result, once the purchase of work-appropriate attire is taken into account, Wagamamas was paying below minimum wage.
Trial shifts are not free shifts
Retail and hospitality businesses have fallen foul of the minimum wage rule when trying out potential new staff. Trial shifts must always be paid at the minimum wage appropriate for the age of the worker.
Mandatory training days
Where employers expect staff to undertake mandatory training whether during or outside of normal work hours, these must be paid.
A few minutes here and there adds up
Employers who ask their staff members to come into work 15 minutes before their shift starts to open a shop or café for example may be illegally paying below the minimum wage of these minutes are unpaid.
Simply not paying NMW
Argos made the HMRC list of employers who failed to pay national minimum wage. Due to a payroll error, 10,399 workers had been underpaid by £480,000.
The potential impacts of breaching NWM law
As well as fines for not paying national minimum wages, prison time is also a possibility for company directors found to be in breach of the law. Employers can be called out with reputational damage affecting their future hiring ability and even impacting their customer brand loyalty. Financial penalties can be substantial – up to 200% of the unpaid wages with a maximum fine of £20,000 per worker.
Salaried workers and minimum wage
It’s possible to run into trouble with salaried workers and the national minimum wage. 2024/25 rate for 21 years and older is 11.44 per hour, so a 37 hour work week means the salary should be no lower than £22,010.56. If the salaried worker actually works more than 37 hours in a week, then you are breaching NMW law if you do not pay overtime.
Are you paying national minimum wage in 2024/25?
Are you worried that you might be failing to meet your obligations around NMW? Give us a call on 01322 250001 or complete our online contact form if you have any questions about employee pay.
