The NMW exists to protect low paid workers by providing a ‘wage floor’ that employers cannot legally go below. HMRC enforces the NMW and in 2010/11, HMRC identified almost £4 million in arrears, benefitting around 23,000 workers. HMRC want to help employers comply with NMW requirements. It saves employers the cost and hassle of an enquiry and helps ensure that low paid workers are paid what they are legally owed. Payroll providers, like ourselves, play a key role in ensuring that our clients’ employees are paid the NMW. Beware, it’s not just a matter of implementing the new rates on 1st October each year, there are other things to consider:-
Failure to record working time properly: Workers must be paid NMW for any additional time, as well as for their normal working hours
Apprentices: All apprentices are entitled to a NMW apprentice rate for all the time they are in work or training.
Birthdays: Does your payroll system alert you to worker’s birthdays to ensure you apply the correct rate?
Deductions from pay:In most cases, the NMW is only worked out after any deductions an employer has made to cover things like uniforms, tools, transport etc. In other words, if an employer is charging for these extras, they still need to ensure the remainder of the worker’s pay meets the NMW for the hours they have worked.
Piece rates: Some workers are paid per item produced. However, if the worker is required to work fixed hours then they must receive at least the NMW for those fixed hours.
Accommodation: If an employer charges workers for accommodation these charges are linked to the payment of NMW, even if the accommodation is not directly connected to the employment.
Very useful topic. Thanks!
Thanks John!