Consensus HR

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Minimum Wage: are you paying the correct rate?

Published in General

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min_wage_moneypile_paMinimum Wage:  are you paying the correct rate?  Wow! Welcome Break was recently ‘named and shamed’ by the government for failing to pay the minimum wage, (alongside 36 other companies).  “Having worked at Forte Restaurants – later Welcome Break – Head Office for many years, I was amazed and disappointed that this has happened.” says Matthew of Consensus HR.

“It just shows that you never know who may not be adhering to the law. It’s of the main reasons that we advise our clients to:

  • Include a salary review date within employees’ contracts
  • Carry out random checks
  • Keep a record to demonstrate that all reasonable measures are taken to ensure compliance should a mistake occur.

Obviously mistakes do happen. When it comes to errors concerning an employee’s pay, demotivation and legal repercussions can result.”

Welcome Break and the other 36 companies must pay a total fine of £51,000. They must also pay affected staff the £177,000 they were underpaid. 

The government has already named 55 firms since October 2013 for underpaying staff. It is the single biggest list of companies exposed by the Department for Business, Innovation and Skills. Welcome Break said a new IT problem contributed to the mistake, while H&M blamed time logging errors.

H&M owner Hennes & Mauritz failed to pay £2,604.87 to 540 workers, said the government department. “H&M employs over 9,500 people in the United Kingdom. Unfortunately due to errors within some of our stores concerning time logging, 540 employees were accidentally underpaid the national minimum wage,” it said in a statement.

Minimum Wage rates

The minimum wage for adults aged 21 and over currently stands at £6.50 per hour although the three major Westminster parties have all said they want to raise it. Current National Minimum Wage rates are:

  • Adult rate (21 and over) – £6.50 per hourpounds_in_hand
  • 18 to 20-year-olds – £5.13 per hour
  • 16 to 17-year-olds – £3.79 per hour
  • Apprentice rate – £2.73 per hour

Tough Action

Business Minister Jo Swinson said: “Paying less than the minimum wage is illegal, immoral and completely unacceptable.

“If employers break this law they need to know that we will take tough action by naming, shaming and fining them as well as helping workers recover the hundreds of thousands of pounds in pay owed to them.”

Birthday Error

Welcome Break failed to pay £1,318.70 to 20 people.

Welcome Break chief executive Rod McKie said: “The initial breach was brought to light as an employee complained to the HMRC that her pay rate had not been increased correctly upon reaching her 21st Birthday.

After investigating, the firm found more people “in a similar position”, he said. “These incidents were not as a result of a decision to withhold an increase but resulted from a combination of factors, specifically, a change of management within the units, periods of holiday and a difficulty with a new IT system and set of management processes.”

The Trades Union Congress, (TUC), recently published a 10-point plan for minimum wage enforcement, including a call for much higher fines. TUC general secretary Frances O’Grady said: “It’s good to see the government getting tough on bad bosses who cheat hard-working employees out of the pay they’re legally entitled to. But with over 600 employers being caught underpaying each year, those named and shamed today are only the tip of the iceberg.”

Matthew from Consensus HR, explains: “There are a number of reasons why employers may have got this wrong or been caught out.  It is most likely to be human error or a straightforward payroll mistake. For example, this could happen by applying the wrong salary for the role or the wrong hourly rate as younger workers reach the next wage level on their birthdays. Mistakes do happen. The records kept by employers and the procedures in place can help to minimise them – and the detrimental affect upon the employees involved and the company.”

“Ultimately, the manager responsible should take ownership,” adds Matthew.

If you have queries or concerns about how your company is meeting employment law requirements, talk to the team at Consensus HR. We’re here to help.