Both the National Living Wage (NLW) and the National Minimum Wage (NMW) are due to increase on 1 April 2017. This increase coincides with a timely campaign from The Department for Business, Energy and Industrial Strategy (BEISS) to increase workers’ awareness of the rates which they are entitled to be paid. Argos have also been in the news for their failure to pay workers the NMW.
Just to recap, the NLW was introduced in April last year and provides a new minimum pay rate for workers over the age of 25.
BEISS’ campaign will be advertised on public transport and in other public spaces has been launched in light of a recent poll that suggested workers were ill-informed as to the current NLW and NMW rates. According to the poll of more than 1,400 workers earning less than £15,000, 69% were unaware that they must be paid for travel time between appointments, 57% did not know that employers may not deduct uniform costs from wages if it takes earnings below the NMW or the NLW, and 48% did not know that tips do not count towards the NMW or NLW.
It certainly seems the case that employers themselves struggle to understand what should be paid to these workers. BEISS recently ‘named and shamed’ over 350 employers who failed to pay workers the NMW. High profile retailers such as Argos, Debenhams and Subway all feature in the list. In Argos’ case, HMRC found that it had scheduled staff briefings before workers actually began their shifts and insisted on carrying out staff security checks outside of working hours. It was ordered to pay staff back pay amounting to £2.4m.
The new rates are as follows:
*Apprentice entitled to national minimum wage if they are over 19 and in second year of apprenticeship
However, it is not always enough for employers to know the rates which should be paid. Employers also need to understand how to calculate the pay and benefits which count towards the NMW and the type of work which is properly considered to be ‘working time’.
As well as penalties, employers should be aware of the potential for adverse publicity and ability to be named and shamed publicly.
If you have any questions regarding the payment of NMW please contact a member of the Employment team.