When the government names and shames employers who have failed to comply with National Minimum Wage rules, hospitality businesses often appear on the list.
In theory, paying the correct National Minimum Wage rate is easy, but there are always areas which bring about confusion.
Ellis Whittam’s Employment Law Advisers highlight some of the key points all hospitality businesses need to be aware of.
Eligibility
All workers have a statutory right to earn the National Minimum Wage/National Living Wage.
A “worker” is an employee or any other individual who works for the employer under a contract whereby they undertake personally to provide services. This excludes anyone who is self-employed.
Additionally, the worker must be at least of school leaving age.
Current rates
As of April 2019, the National Living Wage (the rate for those who are 25 or over) is £8.21 per hour.
At present, National Minimum Wage hourly rates (for those aged under 25) are as follows:
- £7.70 for 21 to 24-year-olds
- £6.15 for 18 to 20-year-olds
- £4.35 for 16 and 17-year-olds
- £3.90 for apprentices.
Apprentices are entitled to £3.70 if they are under 19 or aged 19 or over and in the first year of their apprenticeship. Apprentices are entitled to the National Minimum Wage for their age if they are over the age of 19 and have finished their first year of apprenticeship.
Remember, hourly rates change every April, so make sure you have procedures in place to update your payroll processes annually. Seeking professional support from a HR company will ensure that you are updated and compliant every year.
Working time
One common question many hospitality businesses ask an employment law expert is whether travelling time needs to be included when calculating how many hours an employee has worked.
Generally, travelling for business during normal working hours will count towards working time; consequently it should be included in pay calculations.
However, any travelling time between home and work should not be included, assuming that they work at the same location each day and are travelling to that location.
Record fines for underpaying National Minimum Wage
Almost 240 employers have been named and shamed by the government for underpaying the National Living and Minimum Wage.
Dress code
Employers need to be cautious about making employees pay for their uniforms, or making deductions from their pay to cover the cost of uniforms, if they are only paid the National Minimum Wage.
If the cost of the uniform takes them below the applicable National Minimum Wage rate, this will be unlawful.
For more information, read HMRC’s guidance.
Accommodation
If you provide the employee with accommodation, this can be taken into consideration when determining whether it is appropriate to pay National Minimum Wage. This is a contentious issue in the care sector, where there is an ongoing legal battle between care staff and their employers over pay for sleep-in shifts.
- If you employ a worker who returns each summer or Christmas, make sure you keep track of their age, as the rates they are entitled to may have changed in the intervening period. Keep an eye on birthdays to ensure you are paying the correct rate.
- If you discover that you have underpaid an employee, you should pay any arrears straight away to avoid any issues down the line.
- Ensure you keep accurate records that demonstrate that you have been paying your workers correctly according to their age and employment status.
Confirmation
Don’t end up on the government’s list of offending employers. If you’re not sure whether you’re paying staff correctly, it’s always wise to receive confirmation from a professional source. Our expert Employment Law Advisers can offer reassurance on your current practices, provide practical advice on tricky situations and review your Contracts of Employment so that you don’t get caught out. Call us on 0345 226 8393.
