Minimum Wage: The 10 worst excuses for non-payment

It was announced back in March that the minimum wage would again be increased from October 2014 and with this in mind we came across an interesting article by Rob Moss from ‘Personnel Today’, that we thought we would share with you.

 

The national minimum wage is 15 years old this week, and to coincide HM Revenue & Customs (HMRC) has revealed what it believes are the 10 worst excuses given by employers in the past year for paying below the threshold.

One employer claimed that a worker was his wife, but then had to ask her name. Another claimed that their employees did not speak English, so were not entitled to the minimum wage. Others simply denied that the employee worked there at all.

 

The national minimum wage sets minimum hourly rates that employers must pay their workers. The main rate increases to £6.50 per hour in October 2014.

Jennie Granger, HMRC’s director general of enforcement and compliance, said: “Most employers are honest and pay their staff the correct rate. But this research shows that some still view the national minimum wage as a choice, and will even try these crazy excuses to avoid paying workers what they are due.”

 

Top 10 worst excuses

 

1.  An employer said a woman was not entitled to the minimum wage because she was his wife. When asked what his wife’s name was, the employer said: “Err, her name? What’s your name, love?”

 

2. “My employees don’t speak English, so they’re not entitled to it,” was another reason.

 

3.  An employee ran out of the premises when HMRC officers arrived to check for national minimum wage infringements. The same employee then returned – minus the work pinafore – with the employer claiming that they were a customer.

 

4.  One employer told HMRC: “When the national minimum wage goes up I do increase the amount I pay a little, even if the total pay is still below the national minimum wage. I don’t think it’s right to ignore rises in the national minimum wage.”

 

5.  Upon inspection, an employer told HMRC: “I know I am paying them too little, but they are happy to work for this amount because they are getting experience.”

 

6.  An employer said his employee was just working for a few days, with a view to buying the business. When HMRC checked, the employee’s name was found on historic food temperature records.

 

7.  An employer claimed they realised they were not paying employees the national minimum wage and had just this week increased their income to a new hourly rate – which was still below the minimum wage.

 

8.  An employer told HMRC: “It wasn’t a conscious decision to say ‘I’m not going to pay this’, but I’ve never really considered doing it because I’ve not had people come to me and say, ‘I’m not getting paid enough’ or ‘Is this the minimum wage?’”

 

9.  Another employer claimed an employee was just a friend, and only in the restaurant as they were in the area. HMRC officers returned another day to find the employee in the kitchen preparing food.

 

10.  A number of employers claimed that accommodation they provided workers made up for their shortfall in wages.

 

HMRC said its investigations last year resulted in more than 26,000 people getting a share of £4 million in back pay.

Rob Moss, 3^rd April 2014

 

Tamar HR’s View

Although this is a light hearted look at this issue, HMRC do take compliance very seriously and the penalties for employers who breach National Minimum Wage can reach up £20,000 per employee.   HMRC have the power to name and shame any employer who fails to pay the minimum wage, which could be seriously damaging for  businesses with the negative publicity and could also affect your ability to attract the best talent when recruiting. The businesses we work with take their responsibilities in this area very seriously and Tamar HR is always happy to advise further.  If you would like any further advice on the national minimum wage rates or the upcoming changes, or on your business pay, benefits and rewards more generally, please don’t hesitate to speak to one of the team at Tamar HR.

7 Key questions answered about Early Conciliation

This is part  of the Government reforms under the Enterprise and Regulatory Reform Act 2013 and aimed to cut the £74 million pound cost to run the Employment Tribunal service each year. The second part of the reforms saw the introduction of Early Conciliation, a new service provided by ACAS which went live on 6^th April 2014. This new service aims to help settle disputes between employers and employees without the need to go to court.

The new scheme means that anyone wishing to make an employment tribunal claim will first need to notify ACAS by completing an ‘early conciliation notification form’. This will be a legal requirement from 6^th May 2014 before a claimant can proceed with their claim to the Employment Tribunal.

1) How much will it cost the business?

The service provided by ACAS is free. The aim of the service is to open up dialog between the employee/claimant and employer to try and find a resolution to the dispute. If a resolution can be found, any settlement may have a cost implication for the business; however this approach aims to avoid expensive legal fees that are often involved with traditional settlement agreements.

 

2) Do I have to engage with early conciliation if contacted by ACAS?

For many employers being contacted by ACAS will be the first time they are made aware that their employee or former employee intends to make a claim.  We would always recommend that you gather as much information as possible from the ACAS conciliator, so that you can review your options in more detail. You will not be required to make immediate decisions should you be contacted by ACAS, so take some time and further advice from Tamar HR before you open up any detailed discussions.

 

3) How long will this process take?

Upon receiving the ‘early conciliation notification form’ ACAS will have a period of 1 calendar month to seek to resolve the dispute and will contact both parties quickly after receiving a request. Employers need to be aware that this time period will ‘stop the clock’ in relation to the 3 month period that an employee has to submit an unfair dismissal claim to the Employment Tribunal. If a resolution is close as the month is drawing to a close, there is an option to extend this period by a further 2 weeks should all parties agree to this.

4) Don’t ACAS always take the side of the employee/claimant?

ACAS has been designed to be an impartial service that does not represent either the employee or employer. Their main focus is to advise on the dispute resolution.

5) Who will ACAS contact in our business?

The claimant will name a point of contact on the ‘early conciliation notification form’, so be aware that this will not always be the business owner or a Director of the business. It could be the individual’s Line Manager or Supervisor. We recommend that you brief all your Managers and Supervisors on the correct procedure to follow and who they should inform if they are ever contacted by ACAS.

6) What happens if we reach an agreement?

If a resolution is reached, the ACAS conciliator will prepare a settlement agreement known as a COT3. This will be a legally binding document that will need to be signed by all parties and once complete will restrict the claimant from making any further Tribunal claims on that matter.

7) What happens if we can’t reach an agreement?

If no resolution can be agreed within the time limit or extended period, then early conciliation will come to an end. The claimant will then be free to make a claim to the Employment Tribunal.

The Tamar HR view

Although initially Early Conciliation was seen by employers as another hoop to jump through,  this is an important process which aims to avoid a dispute going to the Employment Tribunal. Since the introduction of the Tribunal fees the number of claims has fallen by nearly 80%, so it will be interesting to see if this figure varies over the coming months with Early Conciliation up and running. If you would like further details on Early Conciliation or advice on how to prepare your team for a call from ACAS, please don’t hesitate to contact us here at Tamar HR.

Auto-Enrolment

Last month we provided you with advice on establishing your company’s staging date for auto-enrolment. This is the important first step to planning for auto-enrolment.   This guidance sets out the next steps once your staging date is confirmed.

Assessing your workforce

All employers with 250 employees or less will have to comply between April 2014 and May 2017.  It is important to assess your workforce in order to understand the worker categories for auto enrolment. 

What is a worker?

Your duties as an employer extend to all workers within your business, but not as far as contractors or self-employed individuals who may be working with you for a limited period. A ‘worker’ is defined by the contractual agreement that you have in place with an individual and as a general rule individuals are likely to be considered a worker if they:

·    Work under a contract of employment, or

·    Have a contract to perform work or services personally and  not undertaking the work as   part of their own business.

There are often many types of workers within each organisation, including permanent, temporary, fixed term and casual. 

Worker categories for auto-enrolment

Workers will be organised into 1 of 3 groups for auto-enrolment purposes and you will need to ensure that you have the following details for each member of your team:

•       The workers age

•       Whether the worker is working or normally works in the UK or overseas

•       The workers earnings

This information will place each individual worker into one of the auto-enrolment categories listed below:

Earnings	Age
	16 - 21	22 - State pension age	State pension age - 74
Less than £5,772	Entitled Worker
Between £5,773 - £10,000	Non-eligible Jobholder
£10,000+	Non-eligible Jobholder	Eligible Jobholder	Non-eligible Jobholder

1. Eligible Jobholder

•       This category of worker will be automatically enrolled

•       Employee has right to ‘opt out’

•       Employer MUST make the minimum contributions

 2. Non-eligible Jobholder

•       Will not be automatically enrolled

•       Employee has right to ‘opt in’

•       Employer MUST make minimum contributions

3. Entitled Worker

•       Will not be automatically enrolled

•       Employee has right to apply

•       Employer NOT required to make contributions

Tamar HR’s view

Generally most employers will already have the required information in place through their payroll systems, but if not it’s a good opportunity to update your records.

Many payroll systems will automatically determine the relevant categories.  Your chosen pension provider may also provide advice. Different pension providers will offer different levels of support, so it’s worth doing some research on the available options and take advice from a financial advisor to ensure that you are getting the best scheme that is available to your business.

 
Next month we will be taking a look at the contribution levels for auto-enrolment and making you aware of both the employer and employee percentages both now and in the future. This can help with financial planning and forecasting.  If you would like to discuss auto-enrolment for your business in more detail, please don’t hesitate to contact Matt at Tamar HR, who will be happy to provide you with support.