The BCR Insolvency Blog

Hidden Aspects Of Minimum Wage

Posted by Chris Knott on 23-Jul-2019 10:00:00

Hidden Aspects of Minimum Wage

With the annual increase in minimum wage, it shouldn’t come as a surprise that more and more companies are being caught underpaying their staff.

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The government has taken an unforgiving stance on this manner of cost-cutting, with breaches of the minimum wage being given higher priority than ever before. However, the set minimum wage isn’t always as cut-and-dry as many employees – and, indeed, employers – may think.


Voluntary Savings

Iceland Foods was accused of underpaying its employees by a massive £3.5m annually over six years – but these deductions were made at the staff’s behest as part of a savings plan. This money was made available at an employee’s request as a refundable asset. We can’t say what the HMRC will conclude, in this case!


Work Time And Minimum Wage

Knowing what to add is as important as knowing what to deduct. Work time classifications vary by industry and role but travelling and rest periods usually qualify as work time – no matter what your employer tries to tell you! The Court of Appeal recently decided that sleep-in shifts do not qualify for minimum wage rates, but only time will tell how the care industry will be impacted by this ruling.


Minimum Wage And Insolvency

If your business is facing insolvency, your wage responsibilities change somewhat. If the company enters liquidation, job loss is unavoidable. If the company enters administration, however, the purpose of the process may be to restructure in a way that saves jobs. Both circumstances do nothing to eliminate your liability when it comes to back pay.

It’s easy to make mistakes with minimum wage compliance, particularly during periods of financial difficulty. For help and advice, get in touch with us for guidance. You can also download our ebook, The Free Guide To Business Recovery & Turnaround.

Image source: Pixabay

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Topics: HMRC

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