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In this round of naming and shaming, the most common reasons for underpayments of NMW/NLW were:
• 39% of employers deducted pay from workers’ wages (79 cases)
• 39% of employers failed to pay workers for working time (78 cases), and
• 21% of employers paid the incorrect apprenticeship rate (42 cases).
Deductions
Under employment law, there are certain deductions that employers can make that won’t take employee pay below the NMW/NLW. These can be for things such as accommodation (subject to a maximum accommodation offset), or where a deduction is made for payment to the employer to buy goods or services from them which are not connected with employment or required by the employment contract.
Employers can’t however make deductions that make employee pay fall below NMW/NLW for the cost of food, training, uniform or childcare. The same applies to paying for the cost or loss of work equipment or PPE, or to buy new clothes to comply with the employer’s dress code.
Unpaid working time
Another area that catches employers out is deciding when working time needs to be paid for, which is not as simple as your clients might think. In most cases, if an employee is required to be somewhere and do something for their employer, they should be paid for that time.
Examples of where employers have got this wrong include where staff have been required to perform additional work before and after their shift, or where they have rounded clocking in time to the nearest hour. Problems can also arise when salaried workers work beyond their basic hours, such as when working over-time, or where pay is delayed due to cashflow or cessation of payments. Finally, some of your clients might ask employees to attend the workplace for training, outside of their usual hours and fail to pay them for ; this is a breach of the NMW/NLW, as is asking someone to perform a trial shift and getting the benefit of their work without paying them.
Failing to pay the correct rate to apprentices
Apprenticeships blend training and work, which means employer gets less benefit from the apprentice as they do from qualified employees. As a result, in certain circumstances, a special apprentice rate applies that is likely to be below the NMW/NLW appropriate for that individual.
The apprentice rate (£5.28 at least until the end of March 2024) applies to all apprentices in their first year, and those under 19 after that. Therefore those who are over 19 and no longer in their first year must be paid NMW for their age. Your clients therefore need to keep on top of this. If the employee celebrates a birthday, moves to another year, or finishes their qualification, their pay needs to be checked. Many employers fail to do this, missing important milestones or being indecisive when the apprenticeships end, leaving the apprenticeship rate in place when it is no longer appropriate to.
Another problem area with apprentices is defining them correctly. Your clients might decide to offer a trial before taking someone on as an apprentice. This is fine, but until they are working on an apprenticeship scheme, they should be paid NMW for their age. Alternatively, your client might argue that in-house training, using internal resources, makes an employee an apprentice. Sometimes this is OK, but there are certain requirements to be an apprentice in law and entitled to the apprentice rate. Working as a trainee employee alone is not enough to make someone an apprentice.
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