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The legal requirement to do at least the bare minimum to pay employees what they are entitled to

Published: 

Mon 11 January, 2021

Money

Those familiar with the naming and shaming of employers failing to pay staff the minimum wage will not have been surprised to see the latest list included some very well-known names.

The government sets a minimum amount an employee must get paid on average for the hours they work.

It is called the National Minimum Wage (NMW) or the National Living Wage (NLW) for those aged 25 or over (1)

The size of the employer is immaterial, as regardless of the extent of the business it still has to pay the correct minimum wage.

Workers must be at least school leaving age to get the NMW, the current rate of pay is £8.72 for adults over 25 (2).

The hourly rate does vary for workers under the age of 25 and for an apprentice.

Some of the UK’s biggest household names were included in the latest government list, which named employers that had failed to pay staff the NMW.

Tesco was named and shamed for underpaying 78,199 workers by more than £5million.

The supermarket giant, said to be the UK's largest private sector employer with around 300,000 staff, topped a list of firms who failed to pay workers the minimum wage.

The list of what was described as 139 ‘rogue’ companies also included Pizza Hut, Superdrug, yoghurt-maker Muller and Scottish football club St Johnstone.

Included on the list of shame alongside the more recognisable names was a number of smaller businesses including independent shops and car washes.

When made aware of the issue some of the more high-profile names on the list explained how the issue had occurred and since been corrected.

In the press release from the Department for Business, Energy & Industrial Strategy, Business Minister Paul Scully said those who fail to pay staff the minimum wage will be caught and made to pay (3)

He said: “Paying the minimum wage is not optional, it is the law. It is never acceptable for any employer to short-change their workers, but it is especially disappointing to see huge household names who absolutely should know better on this list.

“This should serve as a wake-up call to named employers and a reminder to everyone of the importance of paying workers what they are legally entitled to.”

It has been more than 20 years since the NMW was first introduced. In 1999 the rate was £3.60 for an adult aged over 22. Over a decade later it had risen to £5.80 (4).

Minimum wage rates are reviewed every year. They usually change in April if there is an increase.

This year the NLW will increase by 2.2 per cent from £8.72 to £8.91, and will be extended to 23 and 24 year olds for the first time (5)

For workers aged under 23, the increase will be smaller in recognition of the risks to youth employment which the current economic situation poses.

Anyone who is employed as an employee or worker must get the NMW or NLW  (6)

This is whether they are:

  • full time
  • part time
  • doing training essential for the job
  • working in a small or ‘start-up’ business

It also applies to:

  • agency workers
  • agricultural workers
  • apprentices
  • casual labourers, for example someone hired for one day
  • casual workers
  • employees on probation
  • foreign workers
  • home workers
  • offshore workers
  • seafarers
  • workers paid by commission
  • workers paid by the number of items made (piece work)
  • zero-hours workers

The only types of work that are not covered are those who are:

  • self-employed (by choice)
  • a volunteer (by choice)
  • a company director
  • in the armed forces
  • doing work experience as part of a course
  • work shadowing
  • under school leaving age

References:

(1) National Minimum Wage (NMW) or the National Living Wage (NLW) for those aged 25 or over [Internet] www.nidirect.gov.uk [Cited 11.1.2021] https://www.nidirect.gov.uk/articles/national-minimum-wage-and-living-wage

(2) Workers must be at least school leaving age to get the NMW [Internet] www.gov.uk [Cited 11.1.2021]  https://www.gov.uk/national-minimum-wage-rates

(3) Those who fail to pay staff the minimum wage will be caught and made to pay [Internet] www.gov.uk [Cited 11.1.2021] https://www.gov.uk/government/news/rogue-employers-named-and-shamed-for-failing-to-pay-minimum-wage

(4) It has been more than 20 years since the NMW was first introduced. [Internet] www.gov.uk [Cited 11.1.2021] https://www.gov.uk/government/publications/20-years-of-the-national-minimum-wage

(5) This year the NLW will increase by 2.2 per cent from £8.72 to £8.91 [Internet] www.gov.uk [Cited 11.1.2021] https://www.gov.uk/government/publications/low-pay-commission-2020-summary-of-findings

(6) Anyone who is employed as an employee or worker must get the NMW or NLW [Internet] www.acas.org.uk [Cited 11.1.2021]  https://www.acas.org.uk/national-minimum-wage-entitlement/who-gets-the-minimum-wage

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