UK: Updated Guidance On The National Minimum Wage
Posted on May 27, 2015
The Department for Business, Innovation and Skills (BIS) has published updated guidance on calculating the national minimum wage (NMW). The guidance is intended to assist employers comply with their obligation to pay employees the NMW where applicable. The guidance now includes a new section on the family member exemption and the guidance has been updated regarding the position for those required to sleep between duties.
Case law has evolved in recent years regarding the tricky issue of whether employees who sleep between duties should receive the NMW. This issue particularly affects those in the care sector. It has been concluded that an employee who is found to be working, even though they are asleep, is entitled to the NMW for the entire time that they are at work. The guidance clarifies that an employee may be found to be working whilst asleep if, for example, there is a requirement for them to be present or they would face disciplinary action if they left the workplace. In such circumstances, they would be entitled to the NMW.
On the other hand, there will be situations where an employee is only available for work and is permitted to sleep and suitable sleeping facilities are provided at the workplace. In such a situation, the employee will not be working and therefore, the NMW will not be payable. However, the guidance goes on to make it clear that the individual must be paid the NMW for any time that they are awake for the purposes of working. In this type of scenario, it will depend on the nature of the work related obligations to which the employee is subject to while they are asleep. A couple of examples are given in the guidance to demonstrate the position more clearly.
The guidance will be particularly useful for employers who employ staff where it is not always clear-cut whether they are entitled to the national minimum wage or not. It will further assist in ensuring that calculations are accurate in determining whether an employee is receiving the NMW or not e.g. by considering whether incentive payments or allowances counts towards minimum wage payments..
It is worth noting that, as part of the Government’s crackdown on employers who do not pay the national minimum wage, the penalties are to be extended. Currently, there is a maximum penalty of £20,000 for failing to pay the national minimum wage. However, under new rules which will come into force in due course, employers will be penalised up to £20,000 for every individual worker who has not been paid the national minimum wage. Therefore, financial penalties may be significant.