National Minimum Wage – facing an HMRC investigation or just want to be sure you are doing the right thing? We can help!
We recently helped a client (a Field Sales Agency) successfully argue against an HMRC finding that they were not paying the NMW.
NMW may be a simple concept but its calculation is a complicated matter – it depends on age but also on the pay reference period and according to the type of work undertaken – whether it is time work, salaried hours work, output work or unmeasured work. It can also depend on where the worker is based. It applies to both employees and workers. Hours worked for NMW purposes can be different to those that qualify as ‘working time’ under the Working Time Regulations.
The price of getting it wrong is high. Payment of NMW is enforced by HMRC and, as well as being liable for backpay, an employer in breach of obligations is liable to a potential penalty of 200% of the arrears up to £20,000 per worker. An employer may also be ‘named and shamed’ on gov.uk. Refusal or wilful neglect to pay the NMW is a criminal offence and can lead to a custodial sentence of up to two years.
In the recent case, the HMRC took the view that a set of field agents were workers, carrying out unmeasured work and worked from home.
Unmeasured work generally includes work where there are certain tasks to be done but no specified hours or times when these tasks must be done. We were able to demonstrate that in this case, the workers were paid hourly according to the time they worked and were in fact classed as Time Workers. The distinction between time work and unmeasured work can be important as, whilst periods of availability to work is included in the calculation of time that qualifies for the NMW (except in the sleep-in cases) that same distinction does not apply to unmeasured work.
More importantly for our client’s case in this instance was the fact we were able to establish that the workers did not work from home. If they were homeworkers, i.e. their place of work was their home, they would be entitled to be paid for travel time from their home to wherever they worked in the field. This would have serious consequences, as the employer would then be responsible for costs which depend on a factor (the worker’s home address) which has no connection with the job or the place where the job is carried out, and over which the employer has no control. In sectors where profit margins are slim, the distinction really matters.
Every situation is different and requires a clear-headed approach. If you would like further information about how we can help you, or a review of the classification of workers you engage, please do contact us on our advice line.
In giving comment and advice in the article, we do not assume legal responsibility for the accuracy of any particular statement. If you have specific views which you wish to discuss, we would be pleased to assist you.