Butchers on National Minimum Wage underpayment list
Published:  20 February, 2017

Two butchers have been ‘named and shamed’ by HMRC for not paying workers the correct National Minimum Wage (NMW). 

Cambridgeshire-based Stephen’s Family Butchers Ltd which owed £3,542.90 to three workers, and Carrickfergus-based McDowell’s Butchers which owed £359.49 to three workers were named on the list. Both were contacted for comment, without success. They were two of 359 firms that underpaid workers to the tune of nearly £1m.

The National Minimum Wage is now £7.20 an hour for anyone aged 25 or over (£7.50 from April 2017); £6.95 an hour for anyone aged 21–24 (£7.05 from April 2017); £5.55 an hour for anyone aged 18–20 (£5.60 from April 2017); £4.00 an hour for anyone aged 16–17 (£4.05 from April 2017); and £3.40 an hour for apprentices (under age 19 or in first year of apprenticeship) or £3.50 from April 2017.

HMRC said: “It is an employer’s responsibility to be aware of the different minimum wage rates depending on the circumstances of their workers – and to make sure all eligible workers are paid at least the minimum rate they are entitled to.”

Lee Ashwood, a senior associate in the employment department at Eversheds-Sutherland, said calculating the National Minimum Wage can lead to confusion. “To most, the calculation would be pay-divided by hours worked. Unfortunately, it is not that simple and this is often why employers inadvertently pay people less than the NMW.”

The first step, he advised, was to note that the calculation must be based on the relevant ‘pay reference period’ – the period for which an employee receives pay – weekly or monthly for example. Employers then need to look at the total employees were paid before deductions for income tax and National Insurance contributions in the period in question (the relevant pay reference period), and then remove any payments and deductions that do not count towards NMW.”

Basic salary, bonus, commission and other incentive payments based on performance, all count towards NMW as does, in some circumstances, an accommodation allowance. Pension payments, benefits in kind, any extra pay for overtime or shift work must be disregarded.

Establishing how many hours the employee worked is not simple either and Ashwood said employers needed to consider the time spent actually working, including travel time (but not to work), but not any rest or meal breaks during which the employee is not required to work.

The TUC’s general secretary Frances O’Grady added: “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.”