Many staff had a pay rise on 1 April 2019 when the various rates of the national minimum wage (“NMW”) increased, including the national living wage to £8.21 per hour. However, there are exceptions and complications which mean that many employers still get it wrong, ending up on the wrong end of HMRC or employment tribunal claims (with the consequential adverse publicity).
Back in February 2019, the British Retail Consortium expressed their concern that many retailers were being unfairly targeted by HMRC for “technical breaches” of NMW legislation where the errors arise from inadvertent mistakes rather than a deliberate attempt to avoid paying staff what they were due. Recently, a number of employers have been caught out when implementing voluntary salary sacrifice schemes which have brought staff wages below the NMW. Now HMRC has come out fighting, saying that the rules are clear and it will continue to take enforcement action where necessary.
In the meantime, the EAT considered (yet again) a case where the Tribunal had to decide whether time spent on call would amount to “time work” for NMW purposes, such that the relevant staff would be entitled to receive the NMW for all hours spent on call. And the answer – it depends.
In Frudd v The Partington Group Ltd, the staff on a caravan site were on call from the end of their normal shift until 8am the following morning. Until 10pm, they might be required to greet late arrivals and show guests around the site. For this time, they were entitled to receive the NMW. However, after 10pm, they would only be required to work in the event of emergency (for which they would be paid) and were not entitled to receive the NMW for merely being available to work. The Tribunal had failed to give reasons for its finding in respect of the period 7am to 8am when the emergency call out payment no longer applied and the case was remitted by the EAT on this point.
Finally, the High Court recently found in the case Antuzis & Others v DJ Houghton Catching Services Ltd that the directors of a limited company could be held personally liable for breaches of an employment contract where, amongst other things, they did not honestly believe that the Company was complying with the statutory requirement to pay the minimum wage.
Personal liability was established based on the directors’ failure to comply with their duties to the Company. In particular, the Court referred to the requirement to act in good faith so as to promote the success of the Company and, in so doing, to have regard to matters such as “the likely consequences of any decision in the long term: the interests of the company’s employees; the impact of the company’s operations on the community; and the desirability of the company maintaining a reputation for high standards of business conduct”.
As the Court found, “At all material times, each knew exactly what he or she was doing”. Please make sure that you know what you should be doing to get it right.
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