These errors can put employers at risk and may result in an investigation by HMRC. Employers who are non-compliant face heavy fines as well as being named and shamed publically.
Employers might think they are already paying workers the current National Minimum Wage but that does not necessarily mean they are. So what sort of things should employers be looking out for?
Rates: what should I be paying?
The National Minimum Wage and National Living Wage rates are now announced every April – not all employers keep up to date and apply the annual increases. Sometimes, employers fail to increase national minimum wage rates at key birthdays.
Apprentice rates are another common error; employers can fail to apply the apprentice rate correctly according to the worker’s age, how long they have been an apprentice, or if they are on a recognised apprenticeship scheme or not.
If you are not sure that you are paying the right amount, you can find out more and view the current rates here
Deductions - are you making wage deductions that take your worker’s pay below National minimum wage rates?
From a National Minimum Wage perspective an employer can make deductions but as long as it does not take workers’ pay below the national minimum wage in any given pay reference period
A deduction can’t reduce a worker’s wage below the minimum wage rates. Employers sometimes fall foul of deduction errors when they deduct a worker’s pay for items connected with the job, e.g. uniform, safety clothing, specified work wear or tools etc. Deductions for the provision of living accommodation costs are limited up to a set ‘accommodation off-set’ amount.
For more guidance please refer to page 21 of this document: BEIS Calculating the minimum wage guide
Are you including top ups to pay that don’t count as pay for National minimum wage purposes?
A worker’s pay for minimum wage purposes must be calculated in a particular way and some elements do not count. If you include these elements of pay incorrectly then it can appear that you are paying the NMW when you are not.
You can include incentive payments or bonuses, but you must not include tips, gratuities, service charges or cover charges from customers. Nor can you include overtime or shift premia payments. You may pay a worker at a higher rate for some of the work that they do, for example for working overtime, weekend or night shifts but if you do, this premium element of pay does not count towards their minimum wage pay.
To find out more see the guidance on “Calculating the National Minimum Wage” here: BEIS Calculating the minimum wage guide
Worker status errors
You must pay people who do work for you at least the minimum wage if they are a ‘worker’. Employers sometimes mistakenly treat workers as volunteers, interns or self-employed. You can use the National Minimum Wage Worker Checklist to help you decide if an individual should be classed as a ‘worker’ for NMW purposes.
Working time – are you including all the time a worker is working?
The hours you must pay a worker the minimum wage for depends on the type of work they do. For National Minimum Wage purposes, there are four different types of work: time work, salaried hours work, output work and unmeasured work.
A common error employers make is not recognising all the working time and paying for it accordingly. This may include:
• time spent training or on trial
• time spent travelling between work assignments
• small periods of extra time before and after the shift, for example helping to open up or close
• required to be available for work either on standby or on-call or near their workplace
This list is not exhaustive Please refer to Page 28 for detailed guidance on what can be included: BEIS Calculating the minimum wage guide
The cost of getting it wrong
HMRC officers has the right to carry out checks at any time and can ask to see your payment records. They also investigate employers if a worker complains to them. If HMRC finds that an employer hasn’t been paying the correct rates, any arrears have to be paid back to workers immediately. There will also be a fine, currently 200% of the arrears amount, and offenders with arrears over £100 will be publically named and shamed. In the latest On 16 August 2017, 233 businesses who underpaid were named for failing to pay more than 13,000 workers more than £2 million. See here .
Understand your responsibilities – with our new e-learning Paying your
workers the minimum wage see here
The guide explains who can get the minimum wage, what counts as working time, how much to pay and what happens if workers aren’t paid correctly.
This interactive guide is flexible and easy to use – broken down into short sections so you can work through it at your own pace.
Understand the common errors employers make - watch our recorded webinars on
· working time and deductions - webinar recorded in November 2016 see here
· workers status and apprentices - webinar recorded in February 2017 see here
Understand how to calculate the minimum wage - refer to this handy guide
Need to talk through your situation? - Please call the Acas helpline on 0300 123 1100 for free and confidential advice.
Employers need to get ready for the increase in the National Minimum Wage (NMW) and National Living Wage (NLW) on 1 April.
The National Living Wage for those aged 25 and over will increase from £7.20 to £7.50 per hour.
The National Minimum Wage rates will also increase:
• for 21 to 24 year olds – from £6.95 per hour to £7.05
• for 18 to 20 year olds – from £5.55 per hour to £5.60
• for 16 to 17 year olds – from £4.00 per hour to £4.05
• for apprentices aged 16 to 18 and those aged 19 or over if they are in their first year – from £3.40 per hour to £3.50.
The daily accommodation offset will increase from £6.00 to £6.40.
Please set this link as a favourite to check for any updates here
You will also find details of the 2017 campaign here
This message was edited 10 times. Last update was at 04/09/2017 15:08:13