Are You Paying Your Employees The National Living Wage?

This week, the news has highlighted some well-known companies not paying their employees the legal minimum. Companies as large as Debenhams, Subway and Lloyds Pharmacy have not been paying their employees the National Living Wage.

BBC News reported that “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 National Minimum Wage in April 2016.”

“However that includes some people who get accommodation or other benefits as part of their pay. The biggest offenders were employers in hairdressing, hospitality and retail. 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.”

How To Ensure You Pay The National Living Wage

I’ve been asked many variations of the following question: “If large corporations don’t understand how to pay National Living Wage, how do we small businesses get it right?”

So, here are three ways in which you can protect yourself as a business and ensure that your teams are fairly paid the national living wage.

1. Keep Accurate Data

Even if you have someone who is salaried, it is vital to keep accurate data on how many hours they have worked. Usually, it is better to be on a salary for getting mortgages and cars. However, if you pay someone on a salary but don’t specify the number of hours they are working in a contract, they could end up working below the national minimum.

For example, Flossie is on a Salary of £14,976 per annum working 40 hours a week. Flossie works extra hours to help cover for sickness. As she is on a salary, you don’t pay her for those extra hours. However, any hours she works over and above 40 would dilute her pay to below the national minimum.

Even if employees are on a salary, it is essential to keep track of hours work. RotaCloud is one example of how you ran rota your teams and record hours worked. You don’t need any expensive equipment; an employee can use their own smartphone or maybe you could invest in a tablet for the staff to use. Using a system like RotaCloud reduces the number of human errors made when completing spreadsheets.

2. Regular Audits

Whether you’re using Microsoft Excel or RotaCloud (or similar), ensure you are auditing the hours worked by your employees every quarter. If you have outsourced your payroll, your payroll provider should be able to do this for you as part of their service. Regular audits will capture employees who regularly work more hours, plus it might help show if you need more staff or someone is underperforming.

3. Deductions

The HRMC has stringent guidelines on what is acceptable, which includes attachment of earnings orders, child maintenance and student loans to name but a few. If you have an in-house payroll, consider speaking to a specialist. A payroll expert will ensure you are not making deductions, which could mean your employees fall below the National Living Wage.

National Living Wage Summary:

Pay is a very emotive subject. As an employer, you must ensure you are paying your team fairly and adequately. If you are not sure if you’re paying the national living wage, please speak to a payroll specialist.

Alternatively, you could consider outsourcing your payroll. Please get in touch, and I will help ensure you pay your team the national living wage.


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