The worst excuses for not paying National Minimum Wage

As of 1st October, the National Minimum Wage (NMW) for adults (workers aged 21 and over) rose to £6.50 per hour – a 19 pence increase on the previous rate set by the Government and the biggest rise since 2008.

By Karen Credie, KMCHR.

The new rates of pay for all categories of workers are as follows:

• £6.50 for over 21 year olds

• £5.13 for 18-20 year olds

• £3.79 for under 18s

• £2.73 for apprentices

Overall, it is estimated that over 1 million workers in the UK will benefit as a result of the increased rates, with some seeing their wages rise by up to £355 per year.

It goes without saying that paying employees a rate of pay in line with the NMW is a legal requirement. Employers who are found to have breached NMW rules can face hefty fines and will also be required to pay any backdated salary payments.

Despite the seriousness of National Minimum Wage laws, businesses are found to be in breach of the rules by HMRC each year. In 2013, 26,000 employees were found to have been receiving too little pay and a total of £4 million had to be paid in back pay.

To mark the 15th anniversary of the introduction of the NMW this year, HMRC released a list of the worst excuses given by employers for infringements of minimum pay rates. These included statements from employers such as “I know I am paying them too little, but they are happy to work for this amount because they are getting experience” and “I don’t think my workers know anything about the NMW because they don’t speak English.”

It is worth pointing out that ignorance is not an excuse for failing to meet National Minimum Wage requirements. Employers face workforces of increased flexibility and nationality – with part time workers, workers from the EU, workers on study leave etc – and it can be easy to overlook someone’s rate of pay and to ensure it is up to date with the current rates. Whether deliberately or inadvertently, however, any breach is still against the law and taking preventative action by periodically checking all of your workers’ rates of pay is advisable.

Where rates of pay are to be reviewed as a result of the NMW increase, especially across a sizable proportion of the workforce, this can present a useful opportunity for employers to review employees’ terms as a whole. Employment contracts can often go without review for many years at a time, and a periodic ‘once over’ can allow amendments to be made, bringing terms up to date. This is not something that should be done lightly, however, as there are of course rules protecting employees regarding any changes to their contracts of employment. For further advice on this, NMW requirements or indeed any other aspect of HR or employment law, please get in touch.