Accountants & Tax Advisors for small business, contractors and self employed individuals View Services

National Minimum Wage Pitfalls

We have covered this topic before, but following some further recent high profile cases brought against WHSmith, M&S and Argos, all found to be underpaying staff because they hadn’t considered the national minimum wage (NMW) legislation carefully enough, it’s worth covering this again.

WHSmith were found to have underpaid staff about £1 million because they had a uniform policy which required staff to buy their own uniforms, but this resulted in their salaries falling below the NMW.

A similar case a few years back involved Wagamama. The restaurant chain was forced to reimburse employees after misunderstanding how wage laws apply to staff uniforms. Front-of-house staff were required to wear black jeans or a black skirt with their branded Wagamama top. HMRC considered this akin to asking the staff to buy a uniform. Wagamama updated its uniform policy and now pays a uniform supplement to cover the black jeans.

The food store chain Iceland was also in trouble in recent years because HMRC claimed that staff should be compensated for their work footwear since staff guidance advocates “sensible shoes” should be worn.

There is also the issue of time taken to put on and take off safety clothing or a uniform. NMW laws take that time into account. If a worker’s hours in a factory are from 9am to 5pm but they have to arrive 15 minutes earlier to dress, and then another 15 minutes after work, that’s part of their duties.

HMRC have a useful checklist on their website of the most common causes of NMW underpayments, which employers can refer to here.