Shaming low paying employers to continue following review

The Government is to step up its naming and shaming of employers who fail to pay their workers the National Minimum or Living Wage.

Meanwhile, it will increase support for employers to help them comply with low pay legislation.

It says the changes, which follow a review of the process, will see naming rounds occur more often to enhance the effectiveness of the deterrent.

Ministers have also increased the threshold for naming employers, meaning that only firms that owe arrears of more than £500 in National Minimum Wage (NMW) payments to their workforces will now be named.

The threshold was previously £100. This new approach will mean that some businesses falling foul of the rules by minimal sums will not be named, provided they correct any errors. These businesses that underpay by less than £100 will have the chance to correct their mistakes without being named but will still have to pay back workers and could face fines of up to 200% of the arrears.

Business Minister Kelly Tolhurst said: “Anyone who is entitled to the minimum wage should receive it – no ifs, no buts – and we’re cracking down on companies that underpay their workers.

 “We also want to make it as easy as possible for employers, especially small businesses and those trying to do right by their staff, to comply with the NMW rules.

 “The government is also changing regulations to widen the range of pay arrangements available to business employing ‘salaried hours workers’, which are workers who receive an annual salary in equal instalments for a set number of contracted hours. Under these changes, workers who are often paid hourly or per day and consequently have different pay every month, such as those in the retail industry, can be classified as salaried workers.

 “The changes will provide more flexibility in how salaried workers are paid, without reducing protections for workers. At the same time, businesses employing these workers are less likely to be caught out by the NMW legislation due to the differences in their hours from one month to the next.”

The changes include:

1. permitting additional payment cycles for salaried workers, including fortnightly and 4-weekly cycles, providing choice and flexibility to employers and workers
2. allowing employers to choose the ‘calculation year’ fit for their workers, helping them to better monitor the hours worked by salaried workers and identify potential underpayment of wages
3. ensuring salaried workers can receive premium pay, for example for working on Bank Holidays, without losing their entitlement to equal and regular instalments in pay.

These changes are expected to come into force on 6 April this year, subject to normal Parliamentary approvals.

We shall keep clients informed of developments.

Please contact Sorcha Monaghan if you would like more information about the issues raised in this article or any aspect of employment law.