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Instead of being the focus of the usual stories about excess pay for football players, St Mirren Football Club was among a list of employers to be ‘named and shamed’ last week for failing to pay their staff the national minimum wage (NMW). The Paisley side, who currently sit rock bottom of the Scottish Championship, featured in the list published by the Department of Business, Energy and Industrial Strategy (BEIS). The list named 359 UK employers who, between them, underpaid 15,513 workers a massive £994,685. This included a total of 16 employers north of the border, who cumulatively owed 125 workers £29,611, although over half of that total was owed by a charity social care firm ‘Crossroads Caring Scotland’. KFC on Aberdeen’s Union Street was reported to have failed to pay a total of over £1,000 to 23 workers. Other notable high street names to feature on the list included Debenhams and Subway.

Perhaps the worst examples of conduct by those on the list included using tips to top up wages, making staff pay for their own uniforms out of their salary and even docking workers’ wages to pay for their Christmas party!

The NMW is a specified minimum hourly rate of pay to which most workers are entitled. All employers are obliged to pay the NMW, irrespective of their size. In addition, the National Living Wage (NLW) was introduced last year, which applies to workers aged 25 or over. Employers should note that the NMW/NLW will increase with effect from 1 April 2017.The current NMW/NLW rates, as well as those from 1 April 2017 are as follows;

Category Current Rate Rate from 1 April 2017
NLW (ages 25+) £7.20 £7.50
NMW (ages 21-24) £6.95 £7.05
NMW (ages 18-20) £5.55 £5.60
NMW (ages 16-17) £4.00 £4.05
Apprentices (ages under 19, or 19+ and in first year of apprenticeship) £3.40 £3.50

 

Employers who do not pay NMW could face a number of serious consequences.

The UK Government’s naming and shaming scheme was introduced in October 2013 and since then hundreds of employers have been publicly identified, with publicised arrears totalling more than £3.5 million. Although the list is published by BEIS it is compiled by HM Revenue & Customs (HMRC) which is responsible for enforcement of the NMW regime. Enforcement action may be initiated by a complaint from workers, or as a result of risk profiling or targeted enforcement of a particular low-paying sector. HMRC’s officers can carry out inspections at any time and are not required to provide a reason. They can require employers to produce records and provide other information in order to determine the level of pay received by workers.

In addition to the publication measures referred to above enforcement measures available to HMRC include service of notices of underpayment. The notice of underpayment will set out the arrears of NMW to be repaid by the employer, together with a requirement for the employer to pay a financial penalty to the Secretary of State within 28 days of service. The associated penalties on those employers named and shamed last week amounted to approximately £800,000. In the most serious of cases, employers may also face criminal liability.

A worker who does not receive the NMW to which they are entitled may also bring a claim in the employment tribunal for an unlawful deduction from wages or for breach of contract. A worker may also bring an unfair dismissal or a claim for detriment if their employer dismisses them or takes any detrimental action against them because of; becoming or being eligible for the NMW, taking any action to seek to ensure that they receive the appropriate NMW or the employer being prosecuted for an offence under the NMW legislation. Any dismissal of an employee in those circumstances will be automatically unfair under the Employment Rights Act 1996, and there is no qualifying period.

If you have any queries about a NMW issue please contact any member of the Stronachs Employment Team.

Rowan Alexander, Solicitor

 

Chambers UK 2018

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