Unemployment down but more than 200 employers caught paying less than NMW?!

18 August, 2017
by: Cripps Pemberton Greenish

Do you know your National Minimum Wage (NMW) obligations andpound coins what constitutes working time? If not, you could join the list of 230 employers that HMRC has ‘named and shamed’ for failing to comply with their NMW obligations.

Unemployment Down

Official figures suggest that unemployment is at its lowest since 1975 and that weekly earnings have increased by 2.1% compared to this time last year. However, this only tells part of the story and as said in our ‘Brexit: Employment Update’ (Brexit: employment update), statistics suggesting unemployment is down does not automatically mean that people are in gainful employment and/or receiving NMW!

NMW

High-level, an individual is entitled to receive the applicable NMW for his/her working time (a more detailed explanation is here Employer caught out by National Minimum Wage requirements ). 

The government has revealed that a large number of employers have failed to comply with their NMW obligations – and the main culprits come from the high risk sectors HMRC is focussing on, namely social care, hair dressing and retail. Therefore, being employed doesn’t seem to guarantee a fair wage.

Our previous blog set out the risks and claims an employer in breach may face (Take note, new National Minimum Wage rates confirmed )

Self-Employed Contractors and Zero Hours Contracts

The prevalence of self-employed contractor/employment status claims along with the number of individuals working under zero hours contracts are further indicators that ‘lower unemployment’ doesn’t necessarily equate to a healthy level of employment.

The thorny issue of self-employed contractor vs employee/worker status has received plenty of media coverage and court time, such as the matters of Uber and Pimlico Plumbers (Worker status – the plot thickens ).

The attraction for a company to engage an individual as a self-employed contractor is the avoidance of certain obligations, such as NMW and holiday pay.

The distinction between whether an individual is self-employed, an employee, or a worker, is not always easy to make (for example, there are subtle differences between ‘employment’ in the eyes of HMRC and that of the employment tribunals).  Getting it wrong can result in sanctions from HMRC, claims being brought in the employment tribunal, and negative publicity.

Are you confident your self-employed contractors are correctly classified and that your commercial agreements provide you with sufficient protection?

Zero hours contracts are regarded negatively by many, but when used correctly they provided flexibility for both the individual and the employer. Unfortunately, zero hours contracts can also mean that although an individual is not classed as unemployed they could well be working far less hours than a full time employee.  

If you have any questions regarding NMW compliance, employment status, or the use of zero hours contracts please contact Chris Hovenden.