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The Minimum Wage - 2010

ARTICLE ORIGINALLY PUBLISHED SEPTEMBER 2009

The minimum wage has been in place now for a decade. There are still cases of Employers ending up at Tribunal for failing to pay. However, there have been a trickle of key Employment Tribunal cases further emphasising that minimum means minimum. Here are a range of your questions:

What is the minimum wage and when does it change?

The European Working Time Directive 1996 was introduced as a piece of health and safety legislation ie ensuring staff had paid holiday to ensure they had “rest” , limits on their hours of work and adequate rest breaks. Special provisions were introduced for young workers- those aged under 18.

Adult rate	£5.80
18 to 21 years	£4.83
16 to 17 years	£3.57

I am planning my wages costs for 2010 are there likely to be any changes in the minimum wage?

Since 1999 the rate of the minimum wage has risen faster than inflation. There is a suggestion that the adult minimum wage will be payable at 21, rather than 22, from October 2010.

Are apprentices exempt from the minimum wage?

Yes, partially. The minimum wage is payable to apprentices at age 19. If you recruit an apprentice who is already 19 then they are exempt from the minimum wage for the first 12 months. Whilst apprentices are not entitled to the minimum wage there is a minimum apprentice rate of £95 per week. Once again there are rumours that there will be changes involving apprentices when the 2010 is announced. I was contacted only last month by an apprentice aged 34 who had been paid the apprentice wage throughout the 2 years of her training.

One of my apprentices has just qualified, but is still very inexperienced. She has agreed to receive £1.00 an hour under the minimum ware if I keep her on. As it is her suggestion, is this ok?

No, legally it isn’t. She is entitled to the minimum wage and cannot legally agree to receive less. At any time she could make a successful claim for the arrears and you would be liable to a fine of up to £ 5,000 if the practice was discovered.

I pay my staff £4.00 an hour plus commission, they always receive well over the minimum wage and if they didn’t I would pay the amount. Is this compliant?

The position was clear that as long as staff reached the minimum wage the law had been complied with. However in November 2009 a nursing home lost a case where the hourly rate was paid less than the minimum wage but the staff received 30% supplement for shift work. This meant the hourly rate was over the minimum wage. However, the employer lost the case as the minimum wage applies to the hourly rate and the supplement was for something different. The position of commission could be viewed similarly, as that is paid on client takings or retail sales. We await a Tribunal case.

I understand that there are checks that employers pay the minimum wage, but are there ever prosecutions?

The HMRC reported that over £4.5 million had been recovered on behalf of 23,000 workers. The fine for employers is a maximum of £5,000. The most recent case I saw involved a butcher. He pleaded guilty to not paying the minimum wage and making false records. He was fined £700 and had to pay £9,000 in arrears to 2 staff.

In another case a hairdresser resigned from her post as she wasn’t receiving the minimum wage. She took her case to Employment Tribunal claiming constructive dismissal and won her claim and the arrears of pay.

Question - What deductions can I make from my staff who are on the minimum wage?

All of the following are permitted:

Paying back advances of wages
Paying back overpayments
Any agreed deductions eg pension contributions
Payments which are voluntary eg products or hair treatments in the salon