With news of the National Minimum Wage dominating headlines regardling the retail sector last week, legal experts have said employers needed to be as vigilant as ever to ensure their workers were paid correctly.
The pledge came after the retailer revealed the results of an internal review, which also proposed other changes such as guaranteed working hours, following weeks of controversy and accusations of “Victorian” working conditions.
Shortly before that, department store chain Marks & Spencer promised to pay retail customer assistants well above the NMW rate at £8.50 an hour – or £9.65 if they work in London – from next April.
However, Sunday and bank holiday pay rates would be scrapped and become standardised.
The raise came after 70,000 M&S employees signed a petition urging the company not to go ahead with original pay cut proposals to offset the cost of implementing the NMW.
The government recently named and shamed 197 employers for failing to pay their workers the NMW, with the HMRC often zeroing in on retailers – a sector it alleges most frequently breaches NMW legislation.
But with new NMW rates coming into force on October 1, legal experts have said retailers now was a good time to review their pay rates to ensure it meets legislative standards or risk being subject to a fine, being named and shamed, enduring Employment Tribunal claims or even criminal liability.
“The best way for an employer to protect its position is to conduct a full review of its pay roll and contracts of employment to identify potential risks and pitfalls,” Thomson Snell & Passmore partner Susanna Rynehart told the Retail Gazette.
“If an employer discovers that it‘s paid a worker below the legal threshold then it must take immediate steps to pay any arrears.”
Lisa Patmore, a partner in the employment team at Lewis Silkin LLP, agreed.
“Employers need to look at the hours actually worked by their employees that count as working time and then calculate whether the employee receives the NMW for all of that time,” she told the Retail Gazette.
“Employers paying less than NMW must consider why this is, whether any benefits given can be counted towards NMW and how this fits with the strict requirements of NMW legislation.
“The calculation is slightly different depending on the type of employee – for example an hourly paid versus a salaried employee.”
Patmore added that many instances of non-compliance are unintentional, and usually occur because employers don‘t properly know their obligations.
“Employers therefore must have systems in place to identify when workers move from one rate to another and that correct rates are being paid at all times, ensuring that no employee ever falls through the gaps,” she said.
“Given the continued rises in NMW, employ