There is much concern with employers in the motor sector in regard to the compliance requirements of the NMW particularly in light of the difficulties which arise if a failure occurs.
It is important that particular attention is taken of those workers who are remunerated in total or in part by commission. Therefore this is very relevant to those working particularly in sales in for instance a car dealership.
Problems can occur if the worker takes a holiday or there is a lieu period in sales.
The current NMW rates are:
For employee’s 21 years of age or over £6.50 per hour
For employee’s 18 -20 years of age £5.13 per hour
For employee’s under 18 £3,79 per hour
Apprentices £2.73 per hour
When considering whether the payment exceeds the NMW it is necessary to look at the earnings period of the worker and see if the pay for that period exceeds the limit based on the hours worked.
So if the employee is paid on a weekly basis then you look at each week in isolation when considering if the limit is exceeded. So a worker contracted to 40 hours a week if over 21 years old would need to be paid in excess of £260 for the week.
In the case which was brought against Pendragon a car salesman was paid below the NMW because the company had not taken into consideration the deduction made from salary in regard to a demonstrator car he was permitted to use.
The Court confirmed that in calculating the NMW this is determined by reference to the salary less deductions.
If you have not considered this point in regard to your workers then it is worth reviewing and addressing any problems which occur
Clearly HMRC take seriously any breach in the NMW.
It is not simply the case of having to make an additional payment to the employee to bring their salary to the legal limit but also the risk of a penalty – the maximum amount was recently significantly increased.
In addition HMRC have the rights to name and shame the employer.
Working in the industry and talking to finance directors this is something of significant concern who feel should their company be named and shamed their position in the company may be at risk
We know that going forward there is going to be increased attention on employers to ensure that there is compliance with the NMW rules.
It is worth therefore setting up systems and controls to ensure that problems do not arise
Author: Alastair Kendrick (pictured), MHA MacIntyre Hudson