H&M (and others) fail to pay their workers the National Minimum Wage

Posted in Employment

The government has published details of 37 employers which includes the well-known fashion retailer H&M and the motorway services, Welcome Break who have failed to pay their workers the correct National Minimum Wage (NMW).

Collectively, the 37 companies owe workers more than £177,000 in arrears and have been charged financial penalties totalling more than £51,000.

This comes as part of the government’s revised naming and shaming scheme which came into force in October 2013.  Since coming into force, the government has already named and shamed 55 employers who have failed to pay the NMW.

Welcome Break said that a new IT problem contributed to the mistake while H&M blamed errors within some of its stores concerning time logging.  However, regardless of the reason, employers who fail to pay their workers the NMW face being named and shamed by the government.

Business Minister Jo Swinson said: “Paying less than the minimum wage is illegal, immoral and completely unacceptable. If employers break this law they need to know that we will take tough action by naming, shaming and fining them as well as helping workers recover the hundreds of thousands of pounds in pay owed to them.”

The revised NMW naming scheme makes it simpler for the government to name employers who breach NMW laws. Under the original scheme, an employer had to meet one of seven criteria before they could be named. The minimum amount owed to workers had to be at least £2,000 and the average per worker at least £500 before an employer could be referred to BIS for naming. These restrictions have been removed.

Since March last year, the financial penalty for employers who fail to pay their workers the NMW increased from £5,000 to £20,000. However, the government intends to legislate further to impose a penalty of £20,000 for each individual employee who has been underpaid, rather than this being the maximum fine for each employer.

The government hopes that the revised rules will increase compliance and act as a deterrent to employers (in addition to financial penalties).

In light of this, it is extremely important that employers check that their approach to calculating NMW is fully compliant with the NMW legislation which is complex in parts. Difficult issues can arise in relation to calculating working time for these purposes particularly where there are factors such as travel time, call out time and standby time. It is essential that employers who require such working arrangements consider their approach carefully.

The current NMW rates are as follows:

  • Adults (21 and over) – £6.50 per hour
  • 18 to 20-year-olds – £5.13 per hour
  • under 17-year-olds – £3.79 per hour
  • Apprentices – £2.73 per hour
  • If you would like to discuss any of the issues raised in this blog further, please do not hesitate to contact one of our employment law solicitors.Myerson Solicitors LLP are premier employment solicitors in Cheshire and Manchester. Our expert solicitors advise on all aspects of employment law, including tribunal claims, TUPE transfers, contracts of employment and settlement agreements. We also provide extensive support to HR departments and professionals on the full range of employment matters.

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