Pendragon has been hit with a £35,000 fine by Her Majesty’s Revenue & Customs (HMRC) after deductions from staff pay took 40 employees below the national minimum wage.
The UK’s biggest car dealer made deductions from employees’ pay packets to cover the cost of a lease car, as well as a range of other benefits.
However, the Nottingham-based business was summonsed to an employment tribunal in Sheffield last month, where an HMRC claim that the company had underpaid workers was upheld.
The company has now been ordered to pay a total of £30,254.68 to the 40 staff and a penalty of £5,000 was also imposed.
There are different levels of the national minimum wage depending on employees’ ages and whether they are an apprentice.
The current rates (from October 1, 2011) are: £6.08 – the main rate for workers aged 21 and over; £4.98 – the 18-20 rate; £3.68 – the 16-17 rate for workers above school leaving age but under 18; and £2.60 – the apprentice rate, for apprentices under 19, or 19 or over and in the first year of their apprenticeship.
Pendragon was making deductions from the wages of employees under the heading of “motorway” to pay for a lease car from Pendragon Contracts, its leasing division.
However, the company had argued that the alleged deductions did not amount to deductions and were actually payments made by the employees to the employer for their own use and benefit. It added that the sums had been collected from the net pay of the employees purely for “administrative simplicity”.