The national minimum wage - your questions answered

The government has published  details of another five employers who have been named and shamed for not paying the national minimum wage (NMW) - unfortunately two of the five offenders are salon owners, says HJ’s HR expert David Wright. The industry continues to have a poor reputation for breaching the NMW. The government clearly takes a  special interest as the sector also traditionally pay the minimum £2.68 (£107 for 40 hours) hourly rate for apprentices whereas the average is around £150 per week. There has also been adverse publicity because of the large number of questionable self-employed practices and staff in salons. On the Legal forums on HJi.co.uk the most frequent  question relates to the abuse of self-employment. Here are a series of question and answers which might help salon owners avoid the trap of not paying the NMW  - remember ignorance of the rules is not seen as an excuse. When does the NMW change and what options do I have to pay under the figures? The NMW is reviewed every year and the proposed rates for October 2015 are as  follows : Apprentices (under 19s and for the first year): was £2.73 will be £3.30 Under 18: was £3.79 will be £3.87 18 to 20: was £5.13 will be £5.30 21 and over: was £6.50 will be £6.70 Accommodation offset: was £5.08 will be £5.35 There is no scope for paying employees less than the NMW and the fine has recently been increased. Under the previous system, employers faced a maximum fine of £5,000 plus a financial penalty of 50% of the missing wages. This has been increased to £20,000 and 100% of the unpaid wages for every worker. I heard an employer accidentally paid less than the NMW, how can this happen? It might seem unusual but in  the last 12 months I have come across all of the following situation which might be seen as accidents: a) an apprentice was being paid the correct hourly rate but was not being paid for their attendance at college. When these hours were taken into account  the actual hourly rate worked out the rate well below the NMW. B) An apprentice was receiving the apprentice rate but was aged 19 and had been in post for 12 months and was entitled to the 19 year-old NMW. The employer simply didn’t know this provision existed. c) an employer simply was unaware that the NMW had increased in October 2013 and was paying the pre October 2013 rate. d) an individual was not paid for the first two weeks they worked, they were allegedly on a two- week unpaid work trial What if an employee doesn’t bring in enough money to pay them the minimum wage? A salon fell foul of the NMW rules in 2012. They owners simply refused to pay the adult rate when an employee reached age 21.The owners  argued that if they had done so it would have meant they would have had to make the employee redundant. Later it was suggested there had been an "accountancy error". But in either case they had to refund the employee the underpayment and were fined. There is  simply not a legitimate reason for not paying the NMW. If the employee didn’t cover their wages then indeed the options would be redundancy or possibly a reduction in hours. How does the NMW work when I have to make deductions from an employee’s salary? The NMW is the gross figure and you would deduct tax and National insurance as applicable. However the rules are clear that  in the case of the following deductions, taking employees below the NMW are legitimate   •             Deduction from pay or payment by the worker of an advance of wages •             Deduction from pay or payment from the worker to recover an accidental overpayment of wages •             Payments from the worker that are for the purchase of goods and services from the employer •             Payment for Accommodation   David Wright advises Habia and a range of salons across the UK. For an all-inclusive fee of £225, plus VAT, per annum you are able to contact him with all your employment queries and he will guide you through difficult staff issues. The fee is all inclusive no matter how many times you need him. Contact David on 07930 358067, 01302 563691 or visit www.davidwrightpersonnelsupport.co.uk