Getting pay right – How to avoid underpaying your team
A list of 191 companies has been ‘named and shamed’ on the Gov website this week. They failed to pay £2.1 million to more than 34,000 employees.
We at Ashton People Solutions can help if you have any queries over your pay structure, benefits or overtime policy, but please see our tips below which may help you avoid common pay pitfalls.
- Stay up to date with rises in National Living Wage and National Minimum Wage. Changes usually come into effect every April. Plan any increases for your team ahead of time.
- Record and pay overtime correctly – use approval forms, an email trail or spreadsheet to keep track of hours and whether they are paid at a higher rate as per your company policy.
- When making deductions from salary for uniform or damaged or lost company property, ensure that the employee is still left with at least minimum or living wage, depending on their age bracket.
- Time spent travelling to work-related meetings, other sites or for training should usually be paid. This includes giving employees the right to claim back for any accommodation required and paying for time on call even if the employee is at home. Keep a record of training courses employees have been on, and note if any additional hours should be added to their basic salary.
- In the catering, service or leisure industry, ‘tips’ should never be treated as a top up to an employee’s salary. NLW or NMW dictates basic salary before tips or bonuses should meet this obligation. Similarly, other benefits such as meal vouchers do not count towards the wage.
There are some circumstances where you may not need to pay NMW, for example if an employee has their accommodation paid for, like a nanny, or some interns or those gaining work experience. If unsure, and you breach the law regarding pay, not only can you be publicly outed, but you could also face penalties including a fine of up to £20,000 or you can be forbidden from directing a company for 15 years.
National Minimum Wage and National Living Wage explained
Your employees aged 23 and over should be receiving the National Living Wage, the top level of National Minimum Wage, of £8.91 per hour. However, the National Minimum Wage rate applies 22 year olds and below, as follows;
- Age 21 to 22 £8.36
- Age 18 to 20 £6.56
- Under 18 £4.62
The Apprentice rate is different at £4.30 per hour. You can also be penalised for not treating apprentices fairly.
Getting pay right will defend against grievances or claims and will contribute to a happy and valued workforce. Please give us a call on 01352 878535 if you feel you need any advice regarding pay scales or any other HR matter, we will be happy to help.