A new study by the Low Pay Commission found that 439,000 people in the UK were paid less than the legal minimum in April 2018 – up 30,000 on the year before. According to the report, women are more likely than men to be paid less than the minimum wage rate, as well as the youngest and oldest workers. The childcare profession had the highest proportion of underpaid workers, while the largest numbers of underpaid staff worked in hospitality, retail, cleaning and maintenance.
This guide will answer the following questions:
- What are the current rates of pay?
- How do you find out if you have been paying the correct amount?
- What are the penalties for paying below the minimum?
- What does the law require on National Minimum Wage when workers are ‘on call’?
- Can directors be personally liable for breach of contract including non-payment of the statutory minimum wage?
Current rates of pay?
The National Minimum Wage payable to workers aged 16 to 24 is as follows –
Age National Minimum Wage
16-18 £4.35
18-20 £6.15
21-24 £7.70
There is a separate Apprentice Rate of £3.90 but apprentices aged 19 or over who have completed the first year of their apprenticeship are entitled to the National Minimum Wage for their age.
The National Living Wage is payable to workers aged at least 25 at the rate of £8.21.
The hourly rates for the National Minimum Wage and National Living Wage change every April.
The campaigning organisation Living Wage Foundation recommends a higher hourly rate of pay, based on what they describe as ‘the real living wage’. For workers aged 18 and over this is as follows:
Across the UK £9.00
London £10.55
Employers paying at these higher rates might be interested in obtaining accreditation from the Foundation https://www.livingwage.org.uk/become-a-living-wage-employer
How to find out if you have been paying/been paid the correct amount?
There are online calculators for both employers and employees on www.gov.uk.
These calculate whether the correct level of National Minimum Wage and National Living Wage has been paid in past years.
Penalties for under paying the minimum
It is a criminal offence for employers not to pay the National Minimum Wage.
The HMRC who can pursue a case of underpayment on behalf of workers. HMRC is responsible for making sure employers and employment agencies pay the National Minimum Wage and National Living Wage, and its officers have powers to fine employers and to “name and shame” them by including them in a public list of non-payers. The fine can be as much as double the total amount the employer owes. HMRC officers can also enter premises, inspect records, interview employers and pass information on to workers. the National Living Wage or to falsify payment records.
The law on paying National Minimum Wage when workers are ‘on call’?
The requirement to pay the National Minimum Wage when workers are ‘on call’ was addressed in the recent case of Frudd v Partington Group.
A husband and wife team were employed on a caravan site as wardens. When they finished their shifts they were expected to be ‘on call’ until the following morning. They claimed the National Minimum Wage for the ‘on call’ period, of about 12 hours. The Employment Appeal Tribunal held that the couple should be paid the National Minimum Wage up until 10pm. The couple would frequently welcome late arrivals and show them around the site up to about 10pm. After 10pm there was little call on their time.
This case does not provide the clearest outcome for employers, who should tread carefully in the case of workers ‘on call’ around the clock. When in doubt, seek expert advice.
Directors liability for the non-payment of the National Minimum Wage or National Living Wage
Directors can be held liable but this should not generate any panic, other than in circumstances where directors are not acting in good faith to promote the success of their company. Antuzis v DJ Houghton.
The facts of ‘the worst gangmaster case ever’ are shocking. The Claimants were Lithuanian nationals. They were employed to catch chickens and were required to undertake a gruelling and exploitive work regime, were paid less than the statutory minimum wage, had pay withheld as a form of punishment and were not paid holiday pay or overtime. They lived in substandard accommodation provided by their employer, for which unlawful deductions from their wages were made. They were frequently not paid the sums which were recorded as being due to them on their pay slips, which had been calculated on a fictional basis.
The issue to be determined was whether the directors were personally liable for breaches by the Company. The law provides that, if a servant (the directors) acting bona fide within the scope of their authority, but in doing so procures or causes a breach of contract between his employer and a third person, they are not personally liable. The key issue was whether the directors were acting bona fide. The focus in cases such as these, perhaps counter-intuitively, is on the conduct and intention in relation to the servant’s duties towards the company. The directors in this case breached their statutory duties under the Companies Act 2006 (duties on directors to act in good faith to promote the success of the company). The nature of the breach of contract with the Lithuanian workers was relevant to whether the directors had complied with their duties to act in good faith to promote the success of the company. They had wrecked the Company’s reputation and they were not acting bona fide, as neither honestly believed that they were paying chicken catchers the minimum wage, overtime and holiday pay or that they were entitled to withhold payments. As a matter of law, they were completely unable to act in that way on behalf of the Company and it was held that both were jointly and severally liable to the claimants for inducing the breaches of contract by the Company.
This case involves extreme facts, but the duty of directors under the Companies Act is made clear.
Working Time Regulations and Accurate Record Keeping
The keeping of accurate records is not only essential when it comes to the payment of the National Minimum Wage and National Living Wage it might now be a legal requirement. In a recent case in the Court of Justice of the European Union it was held that in order to comply with the provisions of the EU Working Time Directive on maximum weekly working time and daily and weekly rest, Member States must require employers to set up a system for measuring actual daily working time for individual workers
In Great Britain the Working Time Regulations 1998 require employers to keep “adequate records” to show compliance with the 48-hour limit on the average week and the protections for night workers. However, it does not specifically require all daily hours of work to be measured and recorded, nor is there any mention of recording daily or weekly rest periods. Health and Safety Executive (HSE) guidance states that specific records are not required and that employers may be able to rely on records maintained for other purposes, such as pay. The ECJ’s judgment raises serious doubt as to whether these record-keeping rules comply with the Directive’s requirements. Employers now need to consider the possibility that HSE and the courts may start to apply a more purposive interpretation in future.
The topics covered in this Guidance are complex and are provided for general guidance only. If any of the circumstances mentioned in this Guidance have application to you, then contact DHJ Legal for legal advice.
