Do I have to pay the National Minimum Wage?

We get asked this question often and the answer is simple – yes you do (this could be a short blog!). There’s no way of avoiding it. It’s the legal minimum pay that is set by the government each year. It’s the law.  

HMRC take businesses complying with this very seriously. So should you. Recently they started publicly naming and shaming companies who haven’t complied. They’ve also shared a list of excuses business owners have given for not paying the National Minimum Wage. Many of these we have heard before, so we thought it would be fun (yes, really, we consider this fun!) to share our answers:

“She does not deserve the National Minimum Wage because she only makes the teas and sweeps the floors.”

It doesn’t matter whether you believe the work that is being done holds a particular value (though how you can think not having a brew and having dirty floors isn’t of value is beyond us). You have to pay at least National Minimum Wage.

“The employee was not a good worker, so I did not think they deserved to be paid the National Minimum Wage.”

Nope, that doesn’t matter either. You still have to pay National Minimum Wage. It’s your responsibility to manage their performance so they are a good worker. Alternatively, follow a process to dismiss them so that you can hire someone who can do a better job. For the same amount, the National Minimum Wage.

“My accountant and I speak a different language – he does not understand me, and that is why he does not pay my workers the correct wages.”

It’s ultimately the employer’s responsibility to comply with employment law. You might ask your Accountant to make payments for you (a good one will pick up when you pay less than minimum wage) but if they don’t it’s still going to be your problem.   

“My employee is still learning so they are not entitled to the National Minimum Wage.”

Sorry, this one’s still not an excuse. They are entitled to minimum wage. There are lower rates for apprentices, employed via an official apprentice scheme, but you can’t create your own training rate that falls below the National Minimum Wage.

“It is part of UK culture not to pay young workers for the first three months as they have to prove their ‘worth’ first.”

Ummm, not it’s not. It is part of UK employment practices to have a probationary period during the first 3 to 6 months of employment to ensure they are doing what they should be in their role. We always recommend our clients have a contractual probation period, which may include a lower salary, but it still can’t be less than the National Minimum Wage.

“The National Minimum Wage does not apply to my business.”

 I am afraid it does. It applies to all UK businesses. Without exception.

 “I have got an agreement with my workers that I will not pay them the National Minimum Wage; they understand, and they even signed a contract to this effect.”

You can’t create a contract to get you out of paying the minimum wage. A bit like you can’t ask employees to sign a contract that allows you discriminate against them for sex, race, religion etc. Both are illegal.  

“I thought it was okay to pay young workers below the National Minimum Wage as they are not British and therefore do not have the right to be paid it.”

If your workers have the right to work in the UK, they have the right to be paid  minimum wage. If they don’t have the right to work in the UK, you shouldn’t be employing them in the first place.

“My workers like to think of themselves as being self-employed and the National Minimum Wage does not apply to people who work for themselves.”

If your workers like to think of themselves as self-employed, then they should be treated as self-employed and paid for their services outside of PAYE. Meaning they are responsible for their own Tax and NI.  There are a variety of other working arrangements that apply to self-employed workers that you might want to take into account. For clarity, if they are on PAYE, they are not self-employed and you do have to pay the National Minimum Wage.

“My workers are often just on standby when there are no customers in the shop; I only pay them for when they are actually serving someone.”

If you expect your employees to be in the shop for the hours they are waiting to serve customers then they are at work. Therefore, they need to be paid the minimum wage.  10/10 for creativity on this one though!

We’ve heard these, and many more excuses over the years we’ve worked in HR across many different sectors and sizes of business. If you’re not sure on what you have to pay your staff, need help managing poor performance or want advice on whether you need staff on payroll or whether freelance may be a better option for you, then get in touch. We’re happy to work on a one-off or project basis with no long-term commitment, to help keep your business legal and fair.