Failing to meet minimum standards on pay can lead to big penalties, says ROBERT HOLLAND
There’s no doubt that business owners and managers and indeed any employer have a multitude of rules and regulations to deal with aside from the actual business of doing business and making profits. Among those rules and regulations, it’s arguable that one of the most complex and possibly the most sensitive area is that of employment law.
From recruitment and redundancy processes to contracts it can at times feel like wading through treacle. It’s fair to say that much of it can be open to interpretation and consequently this adds to the level of risk.
However, perhaps one topic in particular is more straightforward than the others and that is the National Minimum Wage, officially known as the National Living Wage.
In short, the UK national minimum wage makes clear the lowest amount that workers above school leaving age can be paid by law.
The levels of pay are dependent on age, and from 1 April this year the minimum wage rose 9.7%.
An apprentice rate of £5.28 an hour applies to people under 19 or those over 19 in the first year of an apprenticeship. Anyone else also under 18 is entitled to the same amount.
The rates then broadly increase, with 18 to 20 year olds at £7.49 an hour, 21 to 22 at £10.18 an hour and those aged 23 and over at £10.42 an hour.
It’s not negotiable and as such every employer is expected know how much, at a minimum, they should be paying their workers.
Simple you might say. And easy to follow the rules. Well, not quite.
More than 200 firms in the UK have been named by the UK Government for breaches of this policy over a decade.
More surprising is the fact that large, well known firms including WH Smith, Marks & Spencer and Argos were among those named as having failed to pay the minimum wage.
In total, all the firms found in breach will face penalties amounting to nearly £7 million. The government did not say how much each firm will pay in penalties but confirmed that it would be up to 200% of the arrears owed.
According to the business department approximately 63,000 workers were affected, with most of the breaches occurring between 2017 and 2019.
Each of the big employers mentioned all stated specific reasons why they had breached the rules, none of it intentionally, but the fact remains they did so and now face significant fines.
Whilst the individual fines themselves might not be significant for larger corporates, certainly for smaller businesses they could be extremely damaging. The reputational impact could also be very serious.
The moral of the story here appears to be that, no matter how straightforward the law seems to be, it’s all too easy to fall foul of it.
And whether breaches are intentional or not, we can see that the law applies equally.
Meeting all of your employment law obligations can seem onerous and especially at times of stress in a business it can feel like unnecessary bureaucracy and red tape.
However, it should be said that employment law has evolved over time and, and whilst it can be difficult to navigate, it is there for the right reasons.
Getting the right advice can protect you, your business and your employees.
We know that a workforce that feels it is being treated fairly is a more productive one, which ultimately should result in a more successful business.
Be that business.
Robert Holland is head of employment law at Aberdein Considine