REWARD
Why payments should always be accurate
Danny Done, managing director at Portfolio Payroll, outlines developments and impending changes
A s part of employment law school age, including apprentices, are entitled to earn at least the national minimum wage (NMW) or the national living wage (NLW) for every hour worked. The rates at which these should be paid change yearly and vary depending on the individual’s age. For example, until 1 April 2021, the NLW is payable to those aged 25 and above. Apprentices who are under the age of 19, or 19+ but in the first year of the apprenticeship, are also entitled to a minimum rate specifically constructed for apprentices. Once the apprentice reaches the age of 19 (or they are 19 or over and are in the apprenticeship for longer than one year) they become entitled to the NMW rate that applies to their age group. By law, it is important that employers provisions in the UK, all workers and employees over compulsory pay staff the correct minimum wage rates for their age groups or risk facing serious repercussions for failing to do so. The risks of failing to pay the correct minimum wage rates range from unlawful deductions from wages claims, fines from the government, and/or being ‘named and shamed’ as a ‘rogue’ employer. Unlawful deductions fromwages The only lawful deductions from wages are those that are required by law (such as income tax and National Insurance contributions), authorised by the worker’s
contract, or agreed in writing by the worker prior to the occurrence that gives rise to the deduction(s). Employees can make a claim to an employment tribunal to retrieve the unpaid amount of minimum wage that was unlawfully deducted from their wages. More serious claims of breach of contract can also be brought to a tribunal once employment with the organisation has ended. Remedies for unlawful deductions from wages can range from a declaration, repayment of the underpaid amount, and/ or compensation for any further financial loss to the claimant. Fines and naming and shaming Not only is there a risk of tribunal claims made by employees, the government has relaunched the naming and shaming scheme after a two-year pause (to allow for an evaluation into its effectiveness to be carried out) which carry more stringent penalties on offending employers. Business minister, Paul Scully, has described the ... the government has relaunched the naming and shaming scheme after a two-year pause...
recently published list of 139 organisations that failed to pay their staff the appropriate minimum wage rates for their age groups as a “wake-up call” to rogue employers. After an investigation spanning 2016 to 2018, it has now come to public knowledge that a total of £6,700,000 was left unpaid to over 95,000 employees by both large and small organisations across the UK. According to the government, this offence occurred for a number of reasons, namely that low-paid staff were obligated to cover costs of their work uniforms, training, or parking, as well as employers failing to raise staff pay once they are eligible for a higher wage bracket (e.g. a 20-turned-21-year-old who became eligible for a higher rate of minimum wage was still being paid at the lower rate). Offending employers have been required to make, and have completed making, outstanding wage payments to staff based on current minimum wage rates rather than those in place at that time of the underpayment, as well as fines of 200% of the unpaid amount to the government at a cap of £10,000 per employee. It may be easy for the law to be misconstrued when it comes to minimum wage, especially as it changes on a yearly basis. However, it important that employers keep in mind that the onus remains on them to ensure that they are keeping in line with the law.
Changes ahead To avoid any penalties and/or time-
Workers aged 23 and over (NLW)
£8.91
consuming (and expensive) tribunal claims, employers should keep in mind that the age threshold for the NLW will be lowered to cover 23-year-olds and above. The table shows the current minimum wage hourly rates from 1 April 2021. n
Workers aged 21–22
£8.36
Development rate for workers aged 18–20
£6.56
Young workers rate for workers aged 16–17
£4.62
Apprentices under 19, or 19+ but in the first year of the apprenticeship
£4.30
| Professional in Payroll, Pensions and Reward | March 2021 | Issue 68 38
Made with FlippingBook - Online magazine maker