Hundreds of companies failing to pay minimum wage

The government has named 360 businesses which have failed to pay either the National Minimum Wage (NMW) or the National Living Wage (NLW).
Among them are well-known names like Debenhams, Subway, Lloyds Pharmacy and St Mirren Football Club.
More than 15,500 workers had to be paid back nearly one million pounds.
But that may represent just the tip of the iceberg: The Office for National Statistics has calculated that 362,000 jobs did not pay the NMW in April 2016.

The biggest offenders were employers in hairdressing, hospitality and retail.
One worker at a dental practice in London's Harley Street was refunded nearly £12,000.

Minimum Wage
The fashion store Debenhams had to re-pay £134,000 to more than 11,000 staff - more than half of its shop workers - after an accounting error left each of them around £11 short in wages.
The company was fined £63,000.
A spokesperson said, "As a responsible employer Debenhams is committed to the National Minimum Wage, and as soon as the error was identified by a routine HMRC audit last year, we reimbursed all those affected."

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See the full list of businesses here.

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Excuses used by businesses for not paying the full basic wage included using tips to top up their pay, making reductions to pay for a Christmas party, or making staff pay for their own uniforms.
For the first time the list includes firms which failed to pay the National Living Wage, which was introduced on 1 April 2016 for workers over the age of 25.
The current rate is £7.20 an hour. Those under 25 receive the NMW, currently £6.95 for 21 to 24 year-olds, and £5.55 for 18 to 20 year-olds.


'Higher fines'
In total the 360 businesses that broke the law were fined £800,000.
However the TUC said that was not a big enough deterrent. It called for higher fines, and more prosecutions.

"This should be a wake-up call for employers who value their reputation. If you cheat your staff out of the minimum wage you will be named and shamed," said the TUC's general secretary, Frances O'Grady.
"But we also need to see prosecutions and higher fines for the most serious offenders, especially those who deliberately flout the law."
The ONS has said that 1.3% of employees are not being paid the minimum, amounting to 178,000 full-time workers, and 184,000 part-time workers.

But the TUC believes that even that number is an under-estimate, as it does not take into account those working in internships, or those who may be wrongly classified as self-employed.

http://www.bbc.co.uk/news/business-38979368

So this is the country we live in now? Couple of key quotes for me.

Quote:

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Originally Posted by flumperino

Excuses used by businesses for not paying the full basic wage included using tips to top up their pay, making reductions to pay for a Christmas party, or making staff pay for their own uniforms.

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Absolutely disgraceful. I honestly don't know how those who make these decisions can sleep at night.

Quote:

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Originally Posted by flumperino

In total the 360 businesses that broke the law were fined £800,000.

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This should be £8 billion.

I think the minimum wage did as much damage as it did good. It set a pretty low benchmark for genuine employers and has no basis in real world cost of living in the UK.

The National Minimum Wage (NMW) has actually been around for over a 100 years. It was first introduced in 1909, however it it was limited to just a few industries and was introduced by the Trade Boards Act. The real problem was that there was no way to physically check if companies were paying the NMW as there were no computers and tax returns were based on the the over all wages bill of a company at the end of each year. (Not individually) In 1954 with the introduction of National Insurance (NI) brought about a greater system for checking peoples wages, but again the real emphasis was just to ensure you were paying your NI dews as they were called back then.

Therefore there was rarely any form of action taken against companies who flouted the law. During the 60"s & 70" many industries and business had Unions that enforced the law so it was it wasn't too much of a problem. however during the 80's with the decline of unions and the rise of service industries fast food, Cinemas etc and the growing number of employment agencies. The Labour Party under Neil Kinnock anouced that they would implement and strengthen the rule for the NMW and it took till 1997 for labour to come to power for it to be implemented. The tories totally opposed the bill from start to finish

The NMW would and could be effective. For a lot people, and was between 1999 and 2011. Then when the tories got into power, they couldn't reverse the legislation. So instead introduced their back door method "Zero Hours Contracts" (ZHC) this has been the real killer to the NMW especially in the service industries. ZHC need to be abolished and companies who use them should be shamed, just as much as those who fail to pay the NMW. People work to live NOT live to work

So how does the NMW work with contractors, free lancers and piecework then?

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Originally Posted by MHP

So how does the NMW work with contractors, free lancers and piecework then?

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Well that a totally different matter Free Lancers and contractors are actually governed by "Contract Law' an "Offer and an Acceptance" Generally speaking Contractors and Free lancers are self employed and outside the remit of the NMW and they are exempt from the Standard national insurance rate of 11%. They will pay national insurance but a reduced rate. Their tax is subject to costs and outlay therefore many contractors and freelancers pay a reduced rate of Tax and if they have a very good accountant they will almost nothing. This is an accepted practise, as a contractor will quote a price for a Job and it is he/she that is responsible for ensuring that they themselves are receiving the NMW, which generally speaking if they are experienced in their field. They will be earning more than the NMW, as most contractors wouldn't get out of bed for the NMW. The reason most people are self employed is to earn more than they can with an employer.

"Piece Work" Now here is a total different subject and there is calculation that has to be adhered to legally, but that calculation can be flouted. As the calculation takes into account the number of workers, working on piece work and generally these days piece workers tend to work from home . Piece work in generally applied in the clothing trade, tailoring and cloths packaging. The worker is therefore Free to start and finish work when they want, so keeping a track of hours worked, makes it difficult to bring a case against someone for failing to pay the NMW.

An employer who has piece workers has to either pay the NMW or what is termed a "Fair Rate" and as you can guess they always go for the Fair Rate

The fair rate is 1.2 times the rate which lets a worker of average speed earn the national minimum wage, the employer will find out how many pieces or tasks an average worker can complete in an hour. To work out the fair rate:

• Find out the average rate of work per hour (by counting the number of tasks or pieces completed)

• Divide the minimum wage by the average number of pieces to establish a base rate per item

• Multiply this figure by 1.2 to establish a fair rate for each piece completed

To work out the average rate employers will need to test a group of workers which must be a typical group and not just the fastest one, work out how many pieces per hour have been completed and divide this by the number of workers, this will give the average rate. In practice this may mean that some workers earn substantially more than the National Minimum Wage rate for each hour worked, and that some will receive less if they complete substantially fewer pieces or tasks than the average.
For example, if there are 3 workers in the group, one of who produces 20 hats over the course of an hour, one of whom produces 25 hats over the course of an hour, and the third of whom produced 30, then the over-all average will be 25 hats per hour.
This is worked out by adding together all of the hats produced, and dividing by the total amount of time required to produce them:

20 + 25 + 30
---------------- = 25
1 + 1 + 1

The employer should then divide the current rate for the National Minimum Wage by this figure, then multiply by 1.2.
In this case, for a worker aged 22 or over or over the appropriate National Minimum Wage rate is £6.31 per hour and the price per task / piece would be 0.30.29p per hat.
£6.31
-------- x 1.2 = £0.30.29
25
The law does not specify whether an employer should round up to the nearest penny per unit, but it is important that they do no underpay by rounding down.

The reason I asked is that a lot of small to medium business now don't bother with full time employees due to the NMW and various employment laws that have been introduced. I think the intention was well meant but its had a negative impact in certain areas.

With Regards to Debenhams if you look at the figures. They had to pay £134,000 to 11,000 employees which only equates to £12.18 per person now if this is over a 12 month period then it only equates to a £1 a month. it seems to me the press are just using Debenhams to get the headlines

When the real culprits are those, who short change, their worker by £1 or more per hour. £1 per hour equates to £40 a week, based on a 40 hour week, which is £2,080 per employee per 12 months. These are the people I want to see in court. £63,000 is nothing to Debenhams. But handing out big silly fines is not the best remedy either. As companies with limited capital will trade for a few months after the fine then fold to avoid paying the fine. Resulting in 20 employees loosing their jobs, which obviously is counter productive. What is need is legislation which allows an employee to to snitch on the company and be protected from dismissal or some form of anonymity and employer made to pay back what they owe their employees. this will allow then to still keep trading. There has to be a fine balance here protect the worker but also protect their jobs. It no good a company giving an employee £2,000 back then folding 3 month later leaving with no wages for the last month and no holiday pay as they have gained nothing in the long run. It's called "Corporate Gamesmanship" but this is people lively hoods that they are playing with. This is not Sim City.........!



Rant over chaps but I've seen this time & time again and it gets my goat when I see people put on the breadline and reduce to Job Seekers Allowance, due to some scum bag employer who expects you to work for nothing to line his pockets and allow him to driver a brand new BMW.

I didn't manage to catch all of this but think this looked into what you were on about a little http://www.channel4.com/programmes/d...mand/64584-003

Guardians synopsis of the programme https://www.theguardian.com/society/...tigation-finds
British-based factory workers producing garments for a string of top fashion brands are being paid less than half the legal minimum wage, a new undercover film claims. Textile firms making products for fashion retailers such as River Island, New Look, Boohoo and Missguided are paying their UK workers between £3 and £3.50 an hour, Channel 4’s Dispatches will allege on Monday night.

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Originally Posted by MHP

The reason I asked is that a lot of small to medium business now don't bother with full time employees due to the NMW and various employment laws that have been introduced. I think the intention was well meant but its had a negative impact in certain areas.

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I know exactly what you mean MHP they go for the 16 hours a week rule. Let the state bump up your wages. Which once you work 16 hours a week you can claim Tax Credits. Therefore their mentality is why should I employ 12 workers on 40 hours when I can get away with 20 workers on 16 hours. The law also states with regard the new pension laws that:

Automatic enrolment duties apply to any staff that are aged 22 to state pension age and earn over £192 a week or £833 a month; they must be put into a pension scheme which The employer must contribute towards. Therefore you pay £7.50 an hr for 16 hrs it equates to £120 per week. No need for pension top up. It is for this reason they target housewives on the basis that this is pin money, or they can claim housing benefit. When in fact the money they earn is desperately need to keep their heads above water pay bills and a mortgage.

Not to mention the Tories are doing everything they can to avoid paying housing benefit. If you are a couple living together and your spouse is on 16 hrs and as a result of joint incomes you can claim Housing Benefit and Council Tax but you live in a 3 bed roomed house with 2 young boys under 16 or 2 children of any sex under 10 yrs of age. You were subject to bedroom tax. thankfully this has now been ruled as unlawful in 2016. but it is not over. Sorry I could point out a 100 ways over that the average man and woman is being plagiarised as a drain on society and the economy by tories who think its ok for Google to rip us off for £ millions along with Amazon & Starbucks .

But this was nothing more than saving money on Housing Benefit. Chase Google, Amazon & Starbucks for their taxes not the poor. Stop George Osbourne having a private Jet laid on for him by Google and tickets for the Super Bowel

The care industry are the biggest abusers of this and they repeatedly get away with it!

I wonder how relevant unemployment figures are now a days. We may have the lowest number of unemployed since 2003 but how many of the employed have decent well paid jobs and how many are on the NMW or contractors who's rates have been cut to the bone.