Since the inception of the national minimum wage (NMW), the NMW has risen considerably from the original rate of £3.60 per hour. Since 2015, there also has been the introduction of the national living wage (NLW) which exists as a higher minimum rate of pay. Today the rates are £8.21 per hour for those 25 and over, £7.70 per hour for those between 21 & 24, £6.15 for those aged 18-20, £4.35 for those under 18 and the apprentice wage rate is £3.90.
Issues surrounding the NMW garners significant media and political attention throughout the year with the naming and shaming of companies that fail to pay the NMW or NLW. The Low Pay Commission recently reported that 439,000 people were paid less than the rate they were entitled to in April 2018. The Low Pay Commission’s report and others continue to report a rise in the amount of people being paid less than the legally guaranteed minimum rate per hour. One source also reports that the most likely to be paid less than the NMW are those at both ends of the age spectrum, female workers, and those in more low-skilled jobs.
All employees of an organisation or company are entitled to receive the rate in force at the time as a minimum for the amount of time that they are working. So, this can either be someone without a fixed contract who works varying hours, someone with contractually defined hours and salary, or someone who is paid according to set pieces of work. An employee’s working time includes: (1) job training; (2) time spent travelling (if the travelling is required for your duties); (3) working lunches; (4) time spent abroad while working; (5) paid overtime; (6) unpaid overtime you’re asked to do; (7) time spent on call at work; (8) contractually specified working time; and (9) travel time between your home and place of work (if you don’t have a fixed workplace). Employees that work on farms or offshore are regulated differently to more conventional employees and have their own rules regarding minimum rates of pay.
If employees are paid less than the applicable rate, then there are a number of consequences that can arise. Usually, any contravention of the NMW or NLW is investigated and dealt with by HMRC. The actions that HMRC can take include: serving notices require any underpayments to be paid back to the employee, “naming & shaming”, recovery of underpayments through the legal system, fining employers and even criminal prosecutions. However, individual employees are also entitled to bring claims in either the employment tribunals or the civil courts for an “unlawful deduction from wages”. Ordinarily, you have 3 months minus 1 day from the date the deduction from your wages was made to claim in the employment tribunal (subject to any extension provided by participating in the ACAS Early Conciliation process). The time limits for claiming in the civil courts is usually 5 years, however, the court process can often be more costly and difficult to navigate.
You should take advice from a solicitor as soon as possible and well within the time limit for pursuing claims in the Employment Tribunal to avoid any unnecessary extra costs. Those mentioned by the Low Pay Commission as often not being paid the legally required rate, should be particularly vigilant to make sure that they are not being short changed.
If you think that you may have not been paid the national minimum wage or national living wage, or are an employer with a query in relation to an employee’s rate of pay, please get in touch with a member of our specialist employment team today.