The Government is cracking down on employers who fail to pay the national minimum/living wage to their workers.
Last month, around 200 companies were named and shamed for failing to pay workers the minimum wage.
It was also reported last month that Sports Direct are set to pay around £1 million in back pay to their workers for failing to pay the minimum wage and face a fine of up to £2m imposed by the Department for Business, Energy and Industrial Strategy.
The Guardian newspaper carried out an investigation into the treatment of Sports Direct workers. Their report revealed that warehouse staff were not paid for the time it took to subject them to a body search at the end of each shift. They also had payments deducted from their wage packets for being one minute late. These unreasonable practices led to Sports Direct being held to be in breach of the National Minimum Wage Regulations.
Hermes, the parcel delivery company has also been in the spotlight recently as it faces an HMRC investigation for paying its couriers below the living wage.
Being ordered to pay up to 6 years of back pay, penalties and being named and shamed should be enough of a deterrent for companies to avoid breaching the minimum/living wage rules. However for those that believe they will just pay if they get caught, should not underestimate the long term adverse impact of the bad publicity, namely, loss of reputation, clients and ultimately a downturn in business.
The national minimum wage, as that term is commonly understood, is paid at different rates depending on the age of the worker.
The minimum wage rates of pay change on an annual basis so set a reminder in your calendar to keep abreast of the latest changes.
For all workers below 24, the rate will increase on 1 October 2016 as follows:
- The rate for workers aged 21 to 24: from £6.70 to £6.95.
- The development rate (workers aged 18 to 20): from £5.30 to £5.55.
- The young workers rate (non-apprentices aged under 18 but above compulsory school age): from £3.87 to £4.00.
- The apprenticeship rate: from £3.30 to £3.40.
All workers aged 25 and above receive the national living wage which is currently £7.20. This will not change on 1 October 2016.
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.