Employment Law Or Health & Safety Questions

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<edited by moderator>

 

Hi,

Your timing couldn't be better. I've been brain-dead (and busy) today, can't think what the National Minimum Wage regulations are that allow what is effectively annual pay (same amount each pay reference period - week or month) for varied working patterns (some periods a few hours work, others none, others a lot); the arrangement would mean that some working periods would result in the pay in the pay reference period not being the NMW, but over the year this would even out.

What are the regulations that allow this, that allow the pay to fall below the NMW in some pay reference periods?


Thanks,


Karl Limpert

 

You cannot ever go below minimum wage.
Your pay structure would need to change.
Otherwise it becomes open to exploitation.
The care sector is a prime example.
We dealt with many issues where staff received sleepover allowance.
This meant that through relating pay/hours the companies were below the required rate.
It would be valuable to consult a payroll expert or accountant to restructure your payroll.
HMRC may also assist.
You will understand the structure you are explaining could be utilised illegitimately to accommodate cash flow problems.

 

Thanks,

I mean something like envisaged here: https://www.gov.uk/minimum-wage-different-types-work/paid-an-annual-salary

So one month, no work is done, but the employee is paid, another month, say the worker does 15 hours, but due to annualised pay only gets paid for an annual average of 8 hours.

Nothing to do with sleepovers, which have all sorts of test to consider. Not relevant here though.

I'm speculating that there's something where the Pay Reference Period rules would allow for this, where the normal test of NMW to PRP wouldn't apply, I just can't think what they are.


Karl Limpert

 

Hello
So a annualized salary is paid as such ,
You must meet the hourly rates regardless.
There is no exception to the rules.
If the hours fluctuate or change you must still meet the minimum wage.
The website attached gives you a calculator for this.

 

I get that the minimum wage has to be met regardless, but working on an annual salary, where the employee could work no hours one month but still get paid their monthly salary, what is the regulation that allows the preceding month for the employee to work, for example 16 hours, but only get paid 8 hours at NMW rates?

i.e. Employee works 16 hours in June, but gets paid in the June pay reference period for only 8 hours; employee works no hours in July, but still gets paid in the pay reference period for 8 hours - a two month example of a twelve month year.

The NMW is ultimately paid, but what is the regulation that allows the employer not to pay for all the hours worked in the June pay reference period? How does the employer not fall foul of the NMW regulations in June, before the July pay is made?


Karl Limpert

 

Ok I understand.
Normally most companies would adjust payments according to hours worked.
As I said earlier it could be open to exploitation by unscrupulous employers.
Its simply an annual salary divided into months.
Or monthly payroll.
I am unclear on what you are seeking?.
The normal course of action would be for a payroll provider to adjust payments for hours worked accordingly.
Of course you could have negotiated terms in a contract on how payments are made.
However you would need to clearly demonstrate you meet the required minimum criteria.
Fines and prosecution for low pay are severe.
I recommend you visit an accountant or payroll provider if you are structuring payments.

 

I would imagine it would be simple (if I could identify the regulations), but I guess not. I simply want to know/identify the regulations that would permit this.


Employee works sometimes, agreed hours over the year, paid for the same, which would equate to NMW over the year. But the employee gets paid the same monthly pay – the pay is evened out over every month, regardless of hours worked.


So in one month the employee works 16 hours, but is only paid for 8 hours. This month’s pay falls below the NMW for the Pay Reference Period – although it will be corrected in the subsequent months.

All I’m trying to identify is the regulations that would permit this - to allow the employer to pay on this structure, an average monthly pay, where the NMW is ultimately met, but in any given month the NMW may not (because in other months it will exceed) be paid. (No exploitation. Is this not possible?)


Karl Limpert

 

Using the example in that link above, say Jeba worked 340 hours in month one. Jeba wouldn't be paid the NMW - although later, when she works fewer hours, it will even out, and overall she'll be paid the appropriate amount.

But what regulation allows the employer not to pay Jeba the NMW for month one in that pay reference period?

That's the only question I'm raising - how can the employer not pay Jeba the NMW for month one within that specific pay reference period?


Karl Limpert

 

As I said you can agree a pay stucture in a contract.
However ensure you meet the nmw rates.
Be clear in your terms to avoid investigation.
What im saying about exploitation is a employer could pay somebody £3 an hour for example.
On investigation he makes the claom its because hes going to pay them next month for not working.
How does the low pay team know thats a statement of fact.

 

The reason is clear a pre determined contract laying out pay structure.
This has to be agreed and transparent under investigation.
As I said also ,it is far easier and more common to adjust pay across the year.

 

It's the 2015 Minimum wage regulations. Part 5, Chapter 2.

Welcome. How long have you been a professional for the UK'S top service provider?

 

A number of years now <edited by moderator>

Why do you ask?

 

I believe you settled my restless mind very quickly & easily, Cyndy, thank you. I haven't read the whole thing yet, but that clearly deals with the issue I (among other) was struggling to answer in my own mind.


Karl Limpert

 

Just wondered.

 

Can I ask why you want the information?
Are you currently organising contract terms?

 

It is a bit counter-intuitive, but it does cover what happens if someone leaves part way through the year, which is when there may be problems.

 

I don't understand the question. I am currently holding discussions on UKBF.

 

I dont feel it would cause a problem somebody leaving part way through the year.
Again its a simple payroll and accounting calculation.
As long as the nmw rate has been met ,you are covered.
I would advise you construct payroll differently in this case.
It would make more sense to pay on hours worked during a pay period.
It would simplify your process and be equivalent to nmw and transparent.
Are you currently recruiting ?

 

Sorry Cindy my responses are to the original post.