National minimum wage
All employees and workers are entitled to the national minimum wage (NMW). The rate payable depends on the individual’s age and whether they are in training or doing an apprenticeship.
- NMW rates table
- The ACAS guide to handling pay and wages
- HMRC guidance for Employers about the enforcement of NMW
- Gov.uk guidance on calculating National Minimum Wage and examples of national minimum wage breaches
- The REC have worked with HMRC to publish the National Minimum Wage and the National Living Wage with specific information about the responsibilities that recruiters have in relation to the NMW and NLW and answers some of the questions posed to HMRC.
How much is it?
The hourly rates of pay vary depending on the categories of workers who qualify for the National Minimum Wage (NMW)/National Living Wage (NLW) and are increased by the Government from time to time.
The rates for the NMW and NLW are set annually in April.
Who does not qualify?
- Those who are genuinely self-employed.
The National Minimum Wage Regulations provide that the following Workers do NOT qualify for National Minimum Wage (NMW):
- A worker aged 18 to 25 who is in the first twelve months of new employment and who is employed under a contract of apprenticeship, or if the first 12 months expires before he reaches 19, until he has attained the age of 19.
[This only applies to those engaged under arrangements made by the Government known as Modern Apprenticeships i.e. funded by the DfES.]
- A worker participating on a training or work experience scheme or temporary work to assist him in seeking or obtaining work which is either:
- A scheme provided under arrangements made by the Government or funded in whole or part under the European Social Fund;
- A worker in higher education (at first degree level or below) or teacher training who undergoes a period of work experience not exceeding one year as part of their course. - A worker who receives shelter and other benefits in return for performing work under a scheme which is:
- non-profit making or is run by a charity for the alleviation of poverty
- under which all those participating including the worker in question were immediately before entering the scheme, either homeless or living in a hostel for homeless persons and who were in receipt of income related benefits or were not entitled because they were not habitually resident in the UK - Persons serving in the armed forces
- Share fisherman
- Voluntary workers (who receive no payment and have no contract)
- Persons detained in or on temporary release from prison
- Workers who are participating in the Programme Led Apprenticeships scheme in England (i.e. where a young person can obtain some work experience before moving onto a full apprenticeship);
- Workers “undertaking” courses of higher education (this replaces the previous category of workers “attending” courses of higher education);
- Workers who attend a period of work experience of less than a year as part of a course of further education;
The Regulations also exclude the following categories of workers by providing that the definition of “work” does not include work relating to the employer’s family household. This covers situations where:
- A worker who resides in the family home of the employer and is not a member of the family but is treated as such for the provision of accommodation, meals and sharing of tasks and leisure activities and:
- who does not pay for living accommodation or meals
- the work, if carried out by a family member, would not be treated as being performed under a contract.
[This will exclude “au pairs” who stay with families under the Home Office Guidelines and may exclude nannies who live in unless they are engaged under a contract of employment. Those who do not live in the family home will not be excluded and must be paid at least the NMW rate.]
- A worker who participates in running the family business and who is a member of the employer’s family and resides in the family home of the employer.
Who qualifies?
National Minimum Wage applies to a Worker who:
- is working or ordinarily works in the UK under a contract; and
- has ceased to be of compulsory school age.
A “Worker” includes:
“all individuals who have entered into or work under either a contract of employment or any other contract to personally do any work for another party to the contract, except where that other party is a client of the business or profession carried on by the individual”.
This definition excludes limited company contractors i.e. those who are genuinely self-employed e.g. one who carries on a business as a consultant providing expertise in a particular field and who pays tax under Schedule D. Such people will have to be able to produce a certificate of self-employment from the Inland Revenue but this on its own will not necessarily exclude a worker from entitlement. A tribunal would consider how the worker is paid e.g. by monthly payments or on receipt of an invoice; whether he controls his work time and the operation of his work; and whether he works exclusively for one employer. The Act will apply to the vast majority of people who perform work for another party.
The Act also specifically applies to a category of workers referred to as “agency workers”. These are workers who are supplied by an agent to work for a client under an arrangement between the agent and the client. Where there is no contract given to the worker, the person responsible for complying with the Act and Regulations will be whoever (of either the agency or the client) is responsible for paying the worker or, if this is not clear, who actually pays the worker. Unless the client has a contract with the worker stating clearly that they are responsible for paying the worker, the employment agency must comply with the Act & Regulations if they actually pay the worker.
Seamen working on board a ship registered in the UK and offshore workers working in UK territorial waters or the UK sector of the continental shelf are entitled to be paid at least the NMW. Foreign workers working in the UK and British workers who temporarily work outside the UK must also be paid the NMW.
How do I calculate if it is being paid?
National Minimum Wage (NMW) pay = total gross pay less any reductions applicable, and divide the resulting figure by the total number of hours of timework, salaried hours work, output work or unmeasured work worked, during the pay reference period.
Further clarification of the words shown in bold type is given below.
“Pay reference period”
The pay reference period is the period for which a worker receives pay. The pay reference period will be a month if the worker is paid wages on a monthly basis, a week if wages are paid weekly or a day if paid daily.
“Remuneration”
The starting point is gross pay before deduction of tax and NI and excludes payments for a loan or redundancy. Otherwise the total gross remuneration payable in respect of a single pay reference period (e.g. January) is calculated by adding together:
- pay for work carried out in the current period e.g. wages paid in January for work carried out in January;
- pay received in the next period but earned in the current period e.g. wages paid in February for work carried out in January;
NB Annual bonuses can only be allocated to the month in which they are paid although one twelfth can be allocated to the previous pay period under this Regulation.
- payments in accordance with timesheets submitted more than one pay reference period after the work is performed provided that the payment is made in either the pay reference period in which the record is submitted to the employer or the pay reference period after that if the timesheet is submitted by the worker less than 4 working days before the end of the period following the one in which the work was done
Example: X carries out work in January but only submits his timesheet on the last working day of February and is not entitled to be paid until the timesheet is submitted. Any money paid in respect of that timesheet in February or March, will count towards calculating whether the NMW was paid to X in January. - Where the employer has provided the worker with living accommodation during the pay reference period he can deduct an amount from the worker’s pay or charge him for the accommodation. There is a maximum amount of either the deduction or charge that can be taken into account when calculating the NMW and this will be 7 x the maximum amount. The employer may charge more than the statutory maximum allowable offset rate but any excess will reduce minimum wage pay.
Example: Assume a worker is paid £9 an hour for a 28-hour week and £50 is charged by the employer for accommodation available 6 days per week. The amount that the total pay is reduced by, to calculate NMW, is the amount in excess of the maximum up to £50.
If a time worker is absent due to sickness or holiday and does not make use of living accommodation provided, but is paid during his absence, it will be assumed that the worker would have been able to perform timework on those days on which he is otherwise absent. Therefore the worker’s absence in a week where he has been paid his normal weekly remuneration does not affect the amount of living accommodation allowance that the employer is entitled to deduct from total remuneration.
Other benefits in kind such as meals, luncheon vouchers, company car or insurance do not count towards NMW pay.
What are the “reductions” from pay? (Regulations 31 to 37)
The following items are to be subtracted from the total amount of the remuneration in the pay reference period:
- Money payments paid in respect of work carried out in a previous period;
- Payments for periods of absence of an amount less than the worker would be entitled to if he were working (e.g. where a worker only receives SSP rather than his usual pay during absences due to sickness);
- Any overtime or shift premia - the normal standard or lowest rate applicable for the work will count and any excess premium for overtime will be deducted. If different basic rates apply to different shifts or different duties then the whole rate can be included;
- Allowances other than those attributable to the performance of the worker in carrying out his work e.g. this includes payment for dangerous working conditions, London Weighting payments and being “on call” but does not include performance related or incentive pay;
- Tips, service or cover charge payments or gratuities not paid through the payroll (NB in July 2003 a Bill was laid before Parliament to amend the Regulations so that no tips whether paid through the payroll or not should be counted for NMW purposes. At the time of writing it was still being considered);
- Any money payment paid by the employer to the worker to meet expenses incurred in connection with the worker’s employment e.g. travel/hotel expenses;
- Any deduction or payment in respect of the worker’s expenditure in connection with his employment e.g. cost of uniform, protective clothing or purchase of tools;
- Any deduction made by or payment to the employer for his own use and benefit (e.g. deductions for pension contributions or the cost of meals) except any deduction which is in respect of either the worker’s conduct for which the worker is contractually liable, a loan or advance repayments, or deductions for the purchase of shares or other securities by the worker or in respect of an accidental overpayment of wages.
- Living accommodation charges in excess of the lower figure produced by using the “daily rate” calculations. (See under “Remuneration”.)
How do different types of work affect the NMW calculations?
The National Minimum Wage Regulations specify four types of work. In order to calculate the hours for which the NMW must be paid it is necessary to identify the type of work that applies to the worker in question.
The four types of work are:
- time work;
- salaried hours work;
- output work;
- unmeasured work.
Identifying the category of work depends on the way in which the worker is paid for the work that he does. The following paragraphs explain in more detail how to identify what type of work a worker does. Also how to calculate the hours for which an employer must be paying a rate at least equal to the NMW for each type of work. Broadly speaking, temporary workers who are paid by the hour will be time workers but may be output workers if they are paid per item manufactured or transaction completed.
Workers who receive an annual salary will generally be salaried workers and those who fall into none of these categories are likely to be unmeasured workers.
Time work
Time work is work that is paid by reference to the number of hours a worker works. Time work may also include piecework where the employer fixes the working hours of the worker and pays the worker by reference to the number of items s/he produces or deals s/he processes in that time. Such work under the Regulations will be treated as time work and the employer must pay the worker at least the NMW on average for the hours actually worked regardless of production levels.
Although a worker is paid according to the hours that he works it is not only time that he is actually working that will count for the calculation of the NMW.
Time that must be paid at the national minimum wage rates is time:
- When a worker is at work, required to be at work and is either working or available to work. Time when a worker is taking tea, lunch and other rest breaks is not included in the calculation for NMW purposes;
- Example: A temporary construction worker is engaged to carry out an assignment. When he arrives the site manager is not on site and the worker is required to wait for the site manager’s return. While the temporary worker is on site, required to be there and is available for work he must be paid for his time at least at a rate equal to the NMW,
- When a worker is on call or on stand-by at or near his/her workplace for the purposes of doing work. In 2002 a Court of Appeal decision questioned whether if a worker is on call or stand-by at home this should be time that is included in the calculation for NMW purposes. They concluded in BNA –v- Inland Revenue that workers were ‘working’ even when not actually working but merely awake and awaiting telephone calls at home. The DTI guidance states that if the contract of employment expressly permits a worker to sleep while at work and provided sleeping facilities they need not be paid for periods spent asleep as opposed to actually working. For further information on the current position for 'sleep in shifts', please see: What is the position on 'on call' sleep in shifts (recent case law)? below.
- Example: A waiter employed in a restaurant during a quiet period is required to wait in the restaurant in case he is needed. He must be paid at the NMW rates for the time he spends waiting (his on-call/stand-by time). Similarly a postman who is required to wait outside his depot while mail is sorted before he can load his vehicle and make deliveries must be paid for the time he is required to wait.
- Example: A recruitment consultant on-call at home during the weekend will not be paid at the NMW rate for time on-call when s/he is able to do things other than work but will be paid for any time which s/he is required to work but note the decision in BNA –v- Inland Revenue above.
- When a worker is travelling for the purpose of carrying out duties in the course of his/her work the worker must be paid at least the NMW rate. This will include:
- Travelling during time when s/he would normally be at work including taking rest breaks while on the train/plane/bus etc. e.g. time spent travelling to work appointments such as a travelling salesman or a district nurse on her rounds or time spent travelling between work and a place of training;
- Waiting for trains or changing trains and other forms of transport during time when s/he would normally be working but not when s/he is taking rest breaks while waiting for or changing transport e.g.; having lunch in the station cafe while waiting for a connection;
- Travelling between an address where the worker is temporarily residing for work purposes to his/her place of work, e.g.; travelling from a hotel to, say, a client’s office or his/her own head office for a meeting.
However a time worker will not always be carrying out his duties in the course of travelling. The Regulations provide that where travelling is incidental to duties it is not time when the worker is necessarily working as in the case of a barman on a train i.e. it will not be time when the worker must be paid.
Periods when travelling time will not be paid are when a worker is:
- Travelling between home and the workplace;
- Travelling between home and a place of training;
- Travelling to and from temporary assignments such as a temporary care worker who has, say, three 2 hour assignments during a particular day and is free to do as s/he likes between those assignments, including going home. In REC’s view, the DTI guidance on this point is misleading. However, whether all travel time between temporary assignments will be incidental to the worker’s duties is a question of fact and one that will be left to the courts to determine in any given case. Where assignments are close together and a care worker is travelling from one to the next in succession a court may interpret the travelling time between those assignments as being for the purposes of the worker’s duties in the course of his/her work and if so it will be time that must be paid for. As stated above each case will be decided on its own facts and a general principle will take some time to be established;
- Spending time in training that has been approved by his/her employer either at his/her normal place of work or away from it must be paid at least the NMW. Such time must be time when the worker would normally be working.
- Where a worker’s hours of work vary in length or the time at which they take place so that it is not possible to say that a worker would normally be working, time spent training or travelling to training will be treated as time when the worker would otherwise be working and must therefore be paid at the NMW.
This is a confusing provision because on the face of it would appear to catch temporary workers who are offered free training by employment businesses but whose working hours are, by necessity, often unpredictable. However it is usually the case that when an employment business offers training to a temporary worker, the employment business would not be prepared to register or offer that worker work without them having such training behind them. Time spent getting to and from and during this training is not therefore time when the worker would otherwise be working because without the training the employment business would not take him/her onto its books. On the other hand, training that takes place for the purposes a particular assignment is more likely to be subject to the national minimum wage. Often a client will require temporary workers to attend their offices for a particular length of time prior to an assignment commencing in order that they familiarise themselves with office systems, a particular word processing package or a method of performing the task in hand.
This, in REC’s view will need to be paid at least at the NMW rates.
Time work that is not to be to be taken into account for calculation of the NMW includes the following:
- time when a worker is engaged in any industrial action;
- time when a worker is taking rest breaks except where such breaks are taken while actually travelling for the purposes of work e.g.; on a train etc (see above);
- time when a worker is allowed to sleep at his/her place of work unless that worker is required to get up and work during a sleeping period e.g.; a care worker sleeping in a care home or private household will not be paid for time spent asleep but will be paid for any time s/he is required to work during the night.
Salaried hours work
Salaried hours work is work done under a contract where the worker is paid for a set basic number of minimum hours in a year. Under the contracts he will be entitled to an annual salary and be paid in equal installments e.g. 12 monthly or 52 weekly installments. Although there may be variations in the amount of installments due to pay increases or performance bonuses these do not prevent the work from being classified as salaried hours work.
In order to determine whether the salaried worker is paid at least the NMW one must calculate the hours worked. In addition to hours when work is being performed the following hours should be considered:
- when the salaried worker is available at or near his place of work and is required to be available for such work. Hours during which the worker is on standby or on-call will be included except that if the worker is able to spend part of that time asleep it is only the periods in which he is awake for the purpose of working which will count for calculation of the NMW.
- travelling in the course of his work will count except where the travel is incidental to his duties i.e. he would not otherwise be working and his duties are not necessarily carried out in the course of travel, as is the case for a barman on a train or a chauffeur. Travelling between home and a place where he is temporarily residing other than for the purposes for his work and his place of work will not count for the NMW.
- if he is undergoing training or travelling to training at a place other than his normal place of work, when he would otherwise be working and such training is wholly or mainly in relation to his work, these hours will count towards the calculation of the NMW.
- in the case of absences such as lunch breaks, holidays, sickness or maternity leave these will count towards the calculation of the NMW if the salaried hours worker is paid his normal pay when absent and if they form part of his basic minimum hours under the contract.
If, however, he is paid less than his normal pay during such absences the period of absence must be subtracted from the total hours for which the NMW is payable in the particular pay reference period. The best example of this is where a salaried hours worker is only entitled to statutory sick pay at a rate below his normal pay during periods of sickness absence. The hours for which he receives SSP will be deducted from his basic hours for the calculation.
If the salaried hours worker is engaged in industrial action that time will be treated as an absence from work and will not count towards time when the NMW is payable. Any pay received for hours in which the worker is engaged in a strike, go-slow or work to rule and the hours themselves will be ignored when calculating NMW pay in the pay reference period.
Output/piece work and unmeasured work
Output work means work that the worker is paid for by reference to the number of items s/he produces or the number of sales or deals s/he processes. It differs from time work in that the output is not organised by reference to a specified period of time and is often referred to as piecework or work on commission.
Example: A worker is hired to make pin cushions and is paid £1.50 per pin cushion. Not the time s/he works.
As has already been stated above, where a worker is carrying out piecework or is working on commission and the hours of work are fixed by the employer that work will be categorised as time work rather than output work.
Typical output workers will be workers such as agricultural workers, home workers who are employed to do piecework, workers operating on a commission basis such as sales people.
Output workers must be paid for the time they spend travelling in the course of their work in the same way as time workers must be paid for such time.
Thus, for example, travelling salesmen will need to be paid for their travelling time between appointments. If a travelling salesman has a “fair estimate agreement” travelling time between appointments will therefore need to be included in the estimate of working time.
The National Minimum Wage Regulations will not operate to prevent employers from paying workers according to their output but the rate per item produced will need to be linked to the national minimum wage so that a worker is paid at least at an hourly rate equal to the NMW for the hours which he works. The effect is that such workers must be paid for each hour worked in a pay reference period. This will probably mean that commission-based workers will need to be paid a basic wage or salary at least equal to the NMW.
Before the "ouput work system" was introduced (from 1 October 2004), employers had to pay their workers NMW based on every hour worked as time work or by way of an agreement between the worker and the employer, agreeing a fair estimate of hours to be worked in advance or by the employer calculating the actual number of hours worked by the worker. This was referred to as a "fair estimate agreement".
A “Fair Estimate” Agreement - was valid if the hours worked were set out in an agreement which must have been entered into between the worker and the employer before the start of the pay reference period in question. The agreement needed to set out the number of hours that was estimated that the worker would have been working. The estimate must have been at least 4/5ths of the number of hours an average worker would have taken to complete the same work in the same conditions. The provisions of a valid “fair estimate agreement” were as follows:
- must have been between the worker and the employer;
- must have been agreed before the start of the relevant pay reference period;
- must have been in writing;
- must have been a fair estimate of the number of hours the worker was likely to have worked;
- required the worker to keep a record of actual hours worked which must have been given to the employer as soon after the pay reference period as was reasonably practicable;
- been supported by a contract between the worker and the employer, which should have set out the agreed output or piece rate.
If the agreement was deemed to be fair and the worker worked less than the fair estimate hours s/he must have been paid at least the NMW for the hours worked.If the worker worked for more than the fair estimate of hours however, the employer was not required to pay the NMW for any hours in excess of the fair estimate hours. The worker would however have been entitled to be paid the piece rate for any items produced outside the fair estimate hours.
If the agreement was deemed to be unfair, the employer was required to pay the worker for all hours worked during the pay reference period and at the NMW rate.
What rights does an individual have in relation to NMW?
Right of access to individual records:
A worker may require his employer to produce for inspection any relevant records and obtain copies.
This right is only exercisable for the purposes of establishing he has been paid a rate equal to the NMW and only if the worker believes on reasonable grounds that he may be being paid less than the NMW.
In exercising this right the worker may be accompanied by such other person as the worker thinks fit. He must give notice (a “production notice”) to his employer and in turn his employer shall give the worker reasonable notice of the place and time in which the work records will be produced. The records must be produced within 14 days of the date of receipt of the production notice or at such later time as may be agreed during that period between the worker and the employer.
The relevant records must be produced either at the worker’s place of work or at any other place which it is reasonable in the circumstances for the worker to attend to inspect the records or such other place as may be agreed between the worker and the employer.
Any failure to produce some or all of the relevant records will entitle a worker to present a complaint to an Employment Tribunal within a period of three months following the end of the period of 14 days after a production notice is served or any later period agreed between the employer and the worker.
Where an Employment Tribunal finds the complaint well founded the Tribunal shall make a declaration and an award that the employer pays to the worker a sum equal to 80 times the hourly rate of the NMW in force when the award is made.
Right not to suffer a detriment:
A worker has the right to not be subjected to any detriment as the result of any act or any deliberate failure to act by his employer which arises by reason of any action taken by or on behalf of the worker with a view to enforcing his right; or where such action has resulted in the employer being prosecuted; or because the worker qualifies for the NMW. Provided the worker’s claim that he has been subjected to a detriment, is made in good faith, it does not matter that he is not in fact entitled to exercise this right.
The worker may present a complaint to an Employment Tribunal. If the worker’s complaint is that his contract has been terminated, but he did not have a contract of employment, then his compensation is limited to the sum which would be the basic award for unfair dismissal.
Right not to be unfairly dismissed:
This right applies only to employees and will therefore not apply to most temporary workers who are engaged on the REC Model terms of engagement, which are a contract for services.
If an employee is dismissed because of any action proposed or taken by or on behalf of that employee, with a view to enforcing the employee’s rights in respect of the NMW or where such action has resulted in the employer being prosecuted for an offence under the National Minimum Wage Act 1998, the employee can bring a complaint in an Employment Tribunal. Provided the employee claims in good faith that his rights have been infringed it is immaterial that the employee did not in fact have the right or that the right had not been infringed.
Sections 25 and 26 of the National Minimum Wage Act 1998 amend the Employment Rights Act 1996 and Employment Rights (Northern Ireland) Order 1996 in respect of the provisions relating to the assertion of statutory rights.
How is the NMW enforced?
Failure to pay NMW is a criminal offence which can lead to an enforcement officer from HMRC issuing the employer with a notice of underpayment. For notices of underpayments relating to pay reference periods on or after the 7 March 2014, the notice of underpayment will include an automatic penalty being levied on the employer to the value of 100% of the total NMW underpayment which will be payable to the Secretary of State. The penalty level for underpayments relating to pay reference periods prior to this date will be to the value of 50% of the total underpayment. The penalty was increased by virtue of the National Minimum Wage (Variation of Financial Penalty) Regulations 2014.
The minimum automatic penalty level will be to the value of £100 with a maximum penalty level of £20,000 (this maximum level was raised from the level of £5,000 for underpayments relating to pay reference periods prior to 7 March 2014).
A 50% discount will apply if an employer settles within 14 days of the notification.
HMRC compliance officers have investigatory powers including the power to enter premises to investigate non-compliance, and to remove for a reasonable period, NMW records in order to copy them.
Naming and shaming for non-payment of NMW
A naming and shaming scheme originally came into effect on 1 January 2011 and was amended from 1 October 2013. Prior to 1 October 2013, employers had to meet one of 7 criteria plus a certain financial threshold to be publicly named for failure to pay NMW.
Post 1 October 2013, the naming and shaming scheme applies to all employers that are investigated by HMRC and issued with a notice of underpayment with the aim of providing a deterrent from underpaying in the first place. Importantly naming and shaming is not an alternative to prosecution. Employers will not be named under the scheme whilst prosecution proceedings are in hand or are being considered. Where a potential prosecution case is rejected by the Crown Prosecution Service, the employer will still be named. Those who are prosecuted will then also be named. The employer will be given 28 days to either pay the underpaid NMW or appeal the notice.
If the employer does not lodge an appeal, or the appeal is unsuccessful, as soon as HMRC is satisfied that the arrears have been paid, the employer will be issued with a case closure letter and will then be referred to the Department for Business, Energy and Industrial Strategy (BEIS) for automatic naming under the scheme. The employer has 14 days from the date of the closure letter to write to HMRC with representations as to why they fall under one of the exceptional circumstances not to be named.
There are three exceptions whereby an employer will not automatically be named and shamed:
1. Naming would carry a risk of personal harm to the individual or their family;
2. National security risks associated with naming the employer;
3. Other factors which would render it contrary to the public interest.
If the employer does not make any representations within 14 days, or the representations are not accepted, the employer will be automatically named via a BEIS press notice and BEIS will maintain a public register of employers who have failed to pay or who have been named.
What are the consequences of failure to pay the NMW?
Section 31 of the National Minimum Wage Act 1998 provides that it shall be an offence for an employer of a worker who qualifies for the NMW:
- to refuse or wilfully neglect to remunerate the worker at a rate which is at least equal to the NMW;
- to fail to keep or preserve any record required to be kept under Regulations;
- to make or knowingly cause or allow to be made a false entry in records required to be kept;
- to produce or furnish or knowingly cause or allow to be produced or furnished any false record or information;
- to intentionally delay or obstruct an officer in the exercise of his powers or refuse to answer any question or produce any information or produce any document when required doing so.
If the offence is committed due to the act or default of some other person then that other person is also guilty of the offence. So, for example, if a client does not agree to pay workers supplied by an employment business a rate at least equal to the NMW and fails to comply with any enforcement notice served on the employment business both the client and the employment business will be guilty of an offence under this section.
However it will be a defence for a person charged to prove that he exercised all due diligence and took all reasonable precautions to secure that the provisions of this Act and of any relevant regulations made under it were complied with by himself and by any person under his control.
A person guilty of an offence shall be liable on summary conviction to a fine not exceeding £5000.
It is also worth noting that if it can be proved that an offence committed by a limited company was done with the consent of a person employed by that company or can be attributable to the neglect on the part of that person, the employee as well as the limited company is guilty of the offence and liable to be prosecuted and punished accordingly. This will generally only apply to directors, managers, company secretaries or other similar officers or persons acting in such capacity.
Can I agree with my sales team that the NMW does not apply and they will be paid on commission only?
Any provision in any agreement, whether in the worker’s contract or not, is invalid if it seeks to exclude or limit the operation of the National Minimum Wage Act 1998 or prevent a person from bringing proceedings under this Act before an Employment Tribunal.
The exception to this is a “compromise agreement” which is an agreement by an employee to refrain from instituting or continuing any relevant proceedings before an Employment Tribunal. There are strict conditions that apply to such agreements laid down in the Act.
Complaints brought under the National Minimum Wage Act 1998 will be heard by an Employment Tribunal by a chairman sitting alone. The Act also provides in Section 28 for a reversal of the usual burden of proof so that rather than the individual worker having to prove that he or she qualifies for the NMW it will be presumed that he or she qualifies or qualified at the time for the NMW unless the employer is able to establish the contrary.
Appeals from the Employment Tribunal are to the Employment Appeal Tribunal on questions of law.
If the National Minimum Wage increases midweek, do I have to pay the new rate from the day it is implemented or from the following pay reference period?
The NMW increase should be paid from the following pay reference period and not from the day it is implemented.
For example: if you use a weekly pay reference period beginning on a Monday and let’s say today is Monday 23 November 2020, If a NMW increase is implemented on Wednesday 25 November 2020 and pay day is on Friday 27 November 2020, the NMW increase should be applied in the following week, I.e. from Monday 30 November 2020.
My client has asked me to find a suitable candidate who they will employ directly. The hours and salary information indicates that the hourly rate the client will be paying is below the NMW for individuals over the age of 21 but it is over the NMW for individuals under the age of 21. Can I still advertise for the position?
There are two possible issues that could arise as a result of the above situation. Firstly, the client will be breaching NMW if they pay a permanent candidate who is 21 or over under the respective NMW rate.
Secondly, age is one of the nine protected characteristics under the Equality Act 2010 (the Act) and as such both the client and the employment agency could be liable for an age discrimination claim in this situation. Age discrimination will arise where a worker is subjected to less favourable treatment because of their age. The client will be liable for direct age discrimination where, with a particular salary in mind for the role, they deliberately choose candidates who are under the age of 21 so as to not breach NMW.
Additionally (under Section 56(2) of the Act) an employment agency will be operating as an ‘employment service provider’ as they will be ‘supplying employers with persons to do work.’ The employment agency can therefore be liable for direct age discrimination where they pick and choose which candidates to introduce to clients based on their age (i.e. the agency only supplies permanent candidates under the age of 21 to the client).
Alternatively an employment agency could also be liable for indirect age discrimination, which occurs where the agency applies a provision, criterion or practice to all their candidates which results in people who have a protected characteristic being placed at a disadvantage in comparison to people who do not have the protected characteristic. Turning to the question at hand, indirect discrimination could arise where the employment agency advertises for a role that only pays NMW for individuals under the age of 21, which will potentially place individuals over the age of 21 at a disadvantage.
Therefore advertising pay rates that are only compliant with NMW legislation for individuals under the age of 21 could result in a direct or indirect age discrimination claim being brought against the employment agency and the client.
Previous cases on working time and rest breaks
One of the cases often referred to is Burrow Down Support Services Ltd v Rossiter (2008). This case involved a nightwatchman who was allowed to sleep on the client’s premises during his shifts. He brought proceedings on the groundsthat he should be paid NMW for each hour of his shift. His employer argued that he was entitled to be paid only when he was awake and working. The Employment Tribunal (ET) held that an employee who worked as a night watchman and could sleep for most of his shift was entitled to NMW for each hour of the shift. The Employment Appeal Tribunal (‘EAT’) agreed with the ET and concluded that the night watchman was working throughout the night, even when he was asleep.
Another leading case is Whittlestone v BJP (2013). A carer was required to sleep at the home of three adults who suffered from Down syndrome and she had to attend to them during the night if required. She claimed that she was entitled to be paid NMW for the time she spent sleeping at the house of the adults as well as for travelling between various clients’ homes as those hours constituted time work. Her employers disagreed and pointed out that she was actually not called upon during the night. Her claim initially failed at the ET but the EAT overruled the decision. The Judge made specific reference to the fact that she would have been disciplined if she did not do the shifts required, and she could ‘not for instance slip out for a late night movie or for fish and chips’. Her job was to be there. It was also held that when she could not go home in between assignments her travelling time was time work and should be paid at NMW.
Conversely back in 2011, in the case of Wray v JW Lees & Co (Brewers), Ms Wray was a temporary pub manager and she was provided with free accommodation by her employer. As part of the security requirements she had to sleep in the pub and she claimed that the hours sleeping should be paid at NMW. The ET dismissed her claim and the EAT agreed because Ms Wray was not required to work during that period and if she had to deal with emergencies during the night her level of responsibility was simply a ‘minimum security measure or preventative measure’.
In Truslove and another v Scottish Ambulance Service (2014), the ambulance paramedics whilst on call had to stay in accommodation that was no more than 3 miles from the station they were assigned to and that meant they could not always go home. They brought an ET claim on the grounds that the time spent on call away from home was working time. However the ET disagreed and held that their on call time was not working time but the paramedics appealed. The EAT overruled the original decision and confirmed that because there was a requirement by their employer to be at a particular location, that time was not their own and ‘they were working and not at rest’.
Finally, Esparon v Slavikovska (2014) is another EAT case involving a care worker. Ms Slavikovska was required to sleep in during the night and attend to emergencies in the care home. A key aspect in this case was that there was a statutory requirement for the care home to have a number of qualified, competent and experienced people working at all times. Ms Slavikovska was only paid a lump sum for the night shift which was lower than what she would have received if she had been paid NMW for all of the hours of the night shift. She claimed that she should be paid NMW for the whole shift. Both the ET and EAT ruled in her favour and agreed that her presence at the care home during the night constituted time work.
What is the national living wage?
- Current National Living Wage/Minimum Wage (Gov.uk)
What is the position for ‘on call’ sleep in shifts (recent case law)
Royal Mencap Society v Tomlinson-Blake, Shannon v Rampersad (the Mencap case)
The Mencap case is a leading case in the care sector. The case has been an area of back and forth contention as parties have argued on whether sleep in shifts constitutes working time - meaning that a worker would be entitled to to receive at least national minimum wage if they sleep during the night whilst at work. After a long battle, the case has finally been put to rest. It was appealed to the Supreme Court who affirmed that time spent sleeping during shifts does not constitute working time.
Summary of the Mencap case
Ms Tomlinson-Blake was employed by Mencap. Her role involved a 'sleep in' shift, providing care to 2 men with autisim from 10pm-7am. She was paid a flat rate allowance of £22.35 and would receive an increase if she was called upon during the night. Ms Tomlinson-Blake issued proceedings on the grounds that her 'sleep in shifts' were indeed time work, irrespective of whether she was sleeping or awake.
Timeline of events
Initially the Employment Tribunal(ET) supported her arguments, ruling that the time she spent for the whole 'sleep in shift' constituted time work and she should have been paid atleast NMW for this period. Mencap subsequently appealed, but the Employment Appeal Tribunal (EAT) upheld the ET's decision.
The case was then referred to the Court of Appeal. The Court of Appeal (CAT) overruled the ET and EAT' decision.
Disclaimer
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