How to Pay the NMW

25 employers were named and shamed this week for breaching the law in relation to payment of the national minimum wage (NMW). A press release jointly issued by the Department for Business Innovation and Skills and HM Revenue and Customs, detailed how these employers had underpaid workers by more than £43,000 and now faced additional penalties of over £21,000. Business Minister Jenny Willott said, ‘Paying less than the minimum wage is not only wrong, it’s illegal. If employers break the law they need to know that they will face tough consequences’.

In sectors such as social care where wages are traditionally close to NMW levels, the risk of underpayment in this area is particularly high. Even in circumstances where you offer a basic rate of pay that exceeds the NMW, some working practices can mean that you run the risk of falling foul of the law. With the Government planning to continue with a policy of naming and shaming employers and introducing legislation that could mean a fine of up to £20,000 for every employee who does not receive the NMW, you should read on to ensure that you are aware of practices that could mean you are operating illegally.

Avoid Being Named and Shamed by the HMRC: How to Pay the NMW

Most employers will be aware of the increase in the NMW that comes into effect in October but may not be aware of activities which could mean that staff are actually receiving a salary which breaches minimum wage legislation. Providing a basic rate at, or just above the NMW, may not be enough to prevent you from being at risk from prosecution.

5 Steps to Stay Legal and Pay the NMW

  1. Consider whether any compulsory deductions that you make e.g. for uniforms, DBS checks, etc. do not mean that the average pay of an employee falls below the NMW.
  2. Take the same approach to any unpaid training and meetings that you expect your employees to attend. If staff are spending a considerable amount of time on unpaid work-related activities, this may once again reduce their pay rate to below minimum wage levels.
  3. Review any payments relating to ‘sleep in’ shifts where the staff member may be required to be on call during the night. Such shifts require payment of the NMW and existing arrangements where a lump sum payment below this level is made are not acceptable.
  4. Remember that travel time to and from work-related activities may also be included in the calculation of the minimum wage. If staff are expected to travel to off-site training courses or meetings or to visit clients at home, the time involved may need to be considered.
  5. Be aware of and prepare for the increases to the NMW.

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