Crowley Woodford: National minimum wage traps for the unwary employer

Crowley Woodford

Most workers are entitled to be paid the national minimum wage, with those aged 25 or over entitled to the national living wage. HM Revenue and Customs (HMRC) has wide powers of investigation and enforcement and will name and shame employers found to be underpaying staff. Substantial fines may also be imposed and employees can, within limits, claim pay arrears.

Employers paying at, or near, the minimum rate are particularly at risk of breach because even small errors of approach could put them on the wrong side of the law. They need to address potentially complex issues around, for example, what counts as pay and how many hours a worker has worked.

One particularly tricky issue that employers may overlook is where workers are required to undertake compulsory procedures in their own time without being paid. Examples include donning protective clothing before starting work, opening up premises or undergoing searches on leaving work. Time spent on these procedures, if counted as working time, could result in overall pay falling below the national minimum wage rate. One solution would be to incorporate them within the working day so that workers are paid for the time spent on them.

Another issue flagged up by a Employment Appeal Tribunal (EAT) decision in April 2017 is whether workers should be paid the national minimum wage for time when they are asleep. In the case of Royal Mencap Society v Tomlinson-Blake, the EAT found that a care worker required to sleep overnight at the home of two vulnerable adults was working even when asleep and entitled to the national minimum wage for her night shift rather than a lower flat payment. Relevant factors were that she was required to remain on the premises to meet her employer’s statutory obligations and that she kept a professional ‘listening ear’ out during the night.

The relationship between what is classed as working time and the national minimum wage is now a real focus by HMRC. If an employer gets this wrong, it can have material cost implications where there is a large workforce and entail significant reputational damage.

Crowley Woodford is head of the European employment practice at law firm Ashurst