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Minimum wage

June 5, 2014

Could you live on the minimum wage?  Do you even know what the minimum wage is?

It’s £6.31 an hour, if you’re over 21.  That’s £227.16 a week if you’re on a 36 hour week.  Just under twelve grand a  year.  (And a couple of grand of that is still taxed, too)

Now imagine you’re in a crappy job that doesn’t quite pay you twelve grand a year, and you have to drive around to old people’s houses and make their dinners or get them in and out of bed, and you’re not paid except for the time you’re actually in the room with the client, because the rest of the time you’re on a “rest break” (because driving from one side of the city to another in the middle of the day is so restful) and you’re vaguely aware there’s something wrong with your wage packet because you seem to have been working like a dog for forty seven hours, counting from when you left the house till when you got home, but you’ve still got barely two hundred quid in your wage packet.

What are you going to do?

Because if you complain, if you stick your head over the parapet, why, you aren’t going to work again next week, are you?  And when you go to sign on, you’re as like as not to be told you’ve made yourself voluntarily unemployed so go away and starve quietly…

There’s an asymmetry, in other words, between the employer and the employee.  In the twentieth century you might have said, well, they ought to join a union, but Thatcher did for unions, didn’t she, so these days you’d say, well, there’s minimum wage legislation.  Ring the HMRC hotline…

Which is good, but HMRC have issued a “look how brilliant we are” press release today which has really got my goat.

First thing: is is legal to refuse to pay travelling time under those circumstances?  I don’t know, but the practice is so widely reported that I had assumed it must be.  But look at the middle of page 14 of this HMRC report which says that “time work” includes

travelling in connection with their work. This includes time spent:

o travelling between appointments (but not rest breaks)

o travelling from work to a training venue

Well, if travelling time IS included in minimum wage calculations, why not clearly say so?  Instead of issuing a press release bragging that you have

recovered average arrears of around £205 per worker.

Two hundred quid???  I mean, if it’s money they’re entitled to then, yes, they should have it – but I’d be a lot more impressed if there had been some prosecutions or that the

issued 652 financial penalties, worth £815,269

had been 652 penalties averaging £800 grand instead of totalling £815k – and so averaging £1250.  I mean, scary, right?  Plenty to keep some bastard employer from screwing his poorly-paid staff out of the money they’re entitled to in order to bump up his massive profits.  Oops – sorry, I’m being normative again…

Let’s look at the worked examples in that HMRC paper for a moment again, shall we?  Turn back to page 14 and look at example 1.

Example 1 Domiciliary care worker A is paid £6.35 per hour and is paid weekly. The employer has paid the worker £190.50 for 30 hours worked. Time records show the worker spent a total of 45 minutes that week travelling between clients that had not been recorded as working time.

How to check compliance with NMW legislation

The minimum amount paid to the worker should be £6.31 x 30.75 hours = £194.03

The worker was paid £190.50 so therefore has been underpaid the NMW by £3.53 that week (£194.03 minus £190.50).

Now, just hold on a minute there – the worker is paid £6.35 per hour.  They have been paid for 30 hours when they should have been paid for 30 hours and 45 minutes.  So they have been underpaid by .75x £4.76, but HMRC will only pursue for the difference between the NMWxhours worked and pay, and not for the difference between ACTUAL pay rate x hours worked and amount paid?  In this instance (and the 45 minutes is a pretty unbelievable travel time but let that go) it only amounts to a few pence but how is the worker to collect it?

Look at example two:

Example 2 Domiciliary worker B is paid £7.50 per hour and is paid weekly. The employer has paid the worker £225 for 30 hours worked (30 x £7.50) Time records show the worker spent 2 hours that week travelling between clients that had not been recorded as working time.

How to check compliance with NMW legislation

The minimum amount paid to the worker should be £6.31 x 32 hours = £201.92 As the worker was paid above £201.92 (i.e. above the NMW amount) no arrears are due even after taking account of the additional 2 hours working time spent travelling.

They have, however, been stiffed out of £15 – two hours’ pay – they should have been paid £240 (32 x £7.50) rather than £225 (30 x £7.50).  But because the amount they have been paid is more than the legal minimum, the HMRC NMW enforcement team is going to be no use to them.

That’s like saying everyone’s entitled to £57.35 a week, so if I come along and mug you and nick fifty quid out of your purse, the police won’t do anything about it if I leave you with £57.35, isn’t it?

Ah yes, but the administration of the benefits system and the justice system are different, and so are the administration of the NMW and employment law, right?  So the HMRC team that enforces National Minimum Wage can’t get involved if your employer is ripping you off in some way that doesn’t involve breaking the NMW legislation, right?

Sod that.  There’s an easy fix.  First, make it crystal clear that travelling time – except home to the first visit, and last visit to home – is working time.  Publicise THAT and the press release might be worth having.  Second, issue the workers and the employers with an official HMRC document at the end of any investigation which says clearly the rate of pay and the number of hours worked.  This then would be prima facie evidence that the worker could use to sue the employer for the rest of it, the amount they’ve ripped off that isn’t covered by minimum wage legislation – the five pence not enforced by HMRC in the first example, and the fifteen quid HMRC weren’t interested in, in the second example.

How would the worker make use of that?  Well, an individual worker could sue separately, but it’s likely to be too small an amount for an individual to take the risk.  But maybe for a collection of workers you might get, god help us, the claims management companies stepping in and suing the employer on behalf of a number of workers.  Or – and here’s a thought – how about some kind of collective worker organisation picking up the slack and advertising their services?  Anyone know any trades unions???

3 comments

  1. The amount per investigation did seem very low.

    I’d have thought it would be better for HMRC to spin this as “we’ve done loads of reviews and employers are mostly fine: hurrah, NMW seems to be working”.

    But the travelling time thing is an issue. Shouldn’t someone, maybe the DWP, be enforcing fair contracts? You’d think this could be tied in with a PAYE review – if HMRC can cover NMW, and get picky about the provision of taxable (or otherwise) benefits, surely they can cover this too.

    Or perhaps you could have DWP staff do it and pick up PAYE too, using ex-HMRC staff recruited into DWP but working under HMRC’s aegis, to make sure headcount targets are met? ;-)


    • Yes – again, I’d see it as part of the industrialisation of HMRC, so that the NMW team do sterling work… but don’t look at anything *except* NMW, so there’s a production line review of just one component. But you can’t do “whole case working” AND enforce another department’s legislation without a thorough and expensive review of information gateways and contracts and…


      • You probably can do a certain amount of whole case working, if you have a basic awareness of other issues sufficient to know whether a specialist colleague should be called in. You don’t need to be able to enforce another department’s legislation, you just need to know when an enforcer might be required.

        Working in practice as a CT specialist I wouldn’t advise on PAYE or VAT, but when looking at CT I’d ask enough questions to be able to tell when I should call in a PAYE or VAT colleague to help. I can’t see why an NMW or PAYE reviewer couldn’t have a quick look at the contract terms to see if DWP might be interested.



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