Are you breaching the National Minimum Wage Regulation?
It’s vital for companies to be absolutely certain that they are not paying their employees lower than the National Minimum Wage, says an article on Insider Media written by Steven Porter from Pinsent Masons LLP. Being caught in a breach of the National Minimum Wage Regulations will result in the following consequences:
- Repayment of arrears to employees over a 6-year period;
- A penalty of 200 per cent of the repaid arrears (mitigation available to 100 per cent);
- Being named and shamed on the publically available list of offenders;
- Prosecution in serious breaches or where obstruction has occurred.
HMRC is cracking down on this regulation, and has identified £15.6m in pay that employers owed to more than 200,000 workers last year. Unluckily for all employers, HMRC makes no distinction between genuine attempts to underpay workers, and accidental events which technically lower hourly pay below the threshold. Examples of these are:
- Employees contributing to a Christmas savings scheme,
- Employees purchasing their own shoes to comply with a dress code
- Employers offering Time off in Lieu of payment (often called TOIL).
Employees can report breaches to the HMRC helpline or through ACAS. HMRC can target specific companies and industries that they consider to be likely to breach the National Minimum Wage regulation, such as retail, caring and hospitalities, and they can also review companies completely at random.
If you find out that you have a problem before HMRC visit you, start refunding the employees. This action will show good intentions and mean that you should avoid the penalties and appearance on the public list of offenders.
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One of the reasons why people become underpaid is employers not using the correct time periods in their calculations. This kind of timing slip-up is very likely to occur if your attendance management system is still manual and paper-based. Switching to an automated time management system such as we provide is a sensible decision if you want to avoid completely accidental penalties.
Our complete time and attendance system ensures that your company stays on the right side of regulations such as the National Minimum Wage, as well as international ones such as the European Working Time Directive.
WinTA.NET can handle all frequently used methods of calculating employee hours, from simple determination of overtime by the number of daily hours worked, to the more complex payment of overtime hours adjusted when periodic targets are not met.
A number of basic rules control how hours are calculated. These include settings to separate “worked time” into:
- Different overtime rates.
- Handle night shift working.
- Inserting unpaid breaks when employees do not clock them.
Users can also insert breaks either between set times, and/or after a minimum number of hours have been worked. They can also easily set work patterns, which are a combination of daily rules that are either a repeating pattern of shifts or a list of alternative rules.
Here, WinTA.NET will predict the most appropriate shift depending on the time an employee clocks IN. Each type of pattern can be set up to override the normal pattern and use a specific shift on public holidays or shutdown days.
Relying on your employees to fill in paper timesheets with the hours they think they worked last month is a recipe for disaster.