Alan Price from Peninsula Group comments on why how employers can get the minimum wage right and why it is imperative for them to implement the minimum wage in their businesses?
It is a legal requirement for employers to pay all of their workers at least the national minimum wage or national living wage as dictated by their age. Minimum wages are not a new concept – they have been around since 1999 – however, the details change every year when the rates are updated. Employers must, therefore, be alert to the new rates applicable each year for their worker to ensure that they can avoid large fines. Unfortunately, unintentional breaches of the law are dealt with in the same way as intentional ones; innocent ignorance is not a defence.
Employers should therefore make sure they are aware of the age of their employees when they start employment. Whilst age should not generally play any part in a recruitment decision, knowing how old someone is means that employers can check the correct minimum wage. Keeping track of birthdays is also important for employers who set their rates in line with the minimum wage as a prompt to increase pay per hour when the employee moves up into the next banding.
The National Living Wage provided a new banding for employees from April 2016, and the law now requires employers to pay at least £7.20 per hour to those aged 25 and over (unless they are apprentices within the first year of their apprenticeship).
Minimum wage law will create different challenges for employers in different sectors – those in care need to consider how to deal with employees who sleep in overnight and employers in hospitality need to know how the law applies to the treatment of tips, for example.
Employees who believe they are being underpaid can make a claim to an employment tribunal or HMRC. In both cases the employer will be ordered to pay the employee what they are owed, but where HMRC find a breach, the employer will be also fined and have their name published publically as an employer who has failed to comply with the law.
Alan Price @alan__price is Group Employment Law & HR Director at Peninsular Group.
For more information or advice about employment law please contact Peninsular Group at www.peninsulagrouplimited.com
