Consumer sector continues to struggle with National Minimum Wage

Companies in the Consumer sector continue to come up short when it comes to ensuring that they are paying the National Minimum Wage to all employees. The main areas that employers should watch out for centre around deductions and ensuring that every minute of working time is paid. There have also been some problems caused by paying the incorrect apprenticeship rate.

When I am speaking with clients I advise that they review their time recording processes and make sure that any time for getting changed or preparing to start work is captured, many clients have used technology to improve their systems to ensure that all working time is captured. I also talk to them about training, staff meetings and any other work related events that aren’t purely social events which could also be regarding as working time. One of the most common errors still comes down to the uniform policy, if you stipulate that your employees have to wear a particular uniform and they have to pay for it then this will be a deduction from NMW in the relevant pay period be that one week or one month. Reference is often made to the requirement to wear a certain colour of trousers and/or shoes and this is likely to be too prescriptive and be caught as a deduction.

If in doubt seek legal advice as the fines as well as the potential for naming and shaming and reputational damage make this an issue you want to get right.

Some of the UK’s best known retailers including WH Smith, Marks & Spencer, Argos and LloydsPharmacy are at the head of a list of more than 200 companies collectively fined £7m for failing to pay the legal minimum wage.

The businesses were also forced to pay out £4.9m to about 63,000 workers left out of pocket after violations of the rules were uncovered by inspectors at HMRC, varying from breaches related to asking workers to pay for aspects of their uniform to paying the incorrect apprenticeship rate.

The 200 companies included fashion brands, car washes, hotels and takeaway businesses.”