The Government has published details of another 5 employers who have been named and shamed for not paying the National Minimum wage. Unfortunately 2 of the 5 offenders are salon owners The industry continues to have a poor reputation for breaching the NMW. The Government clearly take a special interest as the sector also traditionally pay the minimum £2.68 (£107 for 40 hours) hourly rate for apprentices whereas the average is around £150 per week.
There has also been adverse publicity because of the large number of questionable self employed practices and staff in salons. On the "ask the experts forum" on the HJI site by some distance the most frequent question relates to the abuse of self employment.
Here are a series of questions regarding the NMW which might help salon owners avoid the trap of not paying the NMW, remember ignorance of the rules is not seen as an excuse
1 When does the NMW change and what options do I have to pay under the figures?
The NMW is reviewed every year and the proposed rates for October 2014 as follows:
There is no scope for paying employees less than the NMW and the fine has recently been increased. Under the previous system, employers faced a maximum fine of £5,000 plus a financial penalty of 50% of the missing wages. This has been increased to £20,000 and 100% of the unpaid wages FOR EVERY WORKER.
2 I heard an employer accidentally paid less than the NMW, how can this happen? It might seem unusual but in the last 12 months I have come across all of the following situation which might be seen as accidents.
3 What if an employee doesn’t bring in enough money to pay them the minimum wage?
A salon fell foul of the NMW rules in 2012,they simply refused to pay the adult rate when an employee reached age 21.They argued if they had done so it would have meant they would have had to make the employee redundant, later it was suggested there had been an "accountancy error" .But in either case they had to refund the employee the underpayment and were fined. There is simply not a legitimate reason for not paying the NMW.If the employee didn’t cover their wages then indeed the options would be redundancy or possibly a reduction in hours.
4 How does the NMW work when I have to make deductions from an employees salary?
The NMW is the gross figure and you would deduct tax and National insurance as applicable. However the rules are clear that the following deductions, taking employees below the NMW are legitimate: