National Minimum Wage Compliance

The National Living Wage now applies to every worker aged 21 and above. As of 1 ^st April 2024, the National Living Wage is now £11.44 per hour.

This change marks the largest increase in National Minimum Wage since the NMW was introduced.

HMRC have approached this increase with a renewed focus on enforcement of National Minimum Wage compliance. HMRC have confirmed their intention to revisit employers who have previously fallen foul of National Minimum Wage breaches/ non-compliance. They are also taking a geographic approach, working through each area of the country.

This change in National Minimum Wage / National Living Wage and the renewed intentions from HMRC to crackdown on non-compliance leaves the Health and Social Care sector exposed to increased risk.

All UK employers have to pay all workers at least the minimum rate (NMW). This minimum rate takes into account things like uncaptured work time (staff not taking breaks, unpaid training time), extra costs (such as mandatory uniform) and travel time.

So whilst paying your staff a rate that is National Minimum Wage compliant sounds like a fix-all solution; you may inadvertently be bringing your pay rates below the National Minimum Wage when you take these factors into account.

Aside from having to rectify the shortfall for the staff member, HMRC enforce greater penalties to further discourage non-compliance.

The potential penalties for non-compliance:

200% of the shortfall/arrears per worker

Minimum of £100 fine per notice of underpayment

Maximum amount of £20,000 per worker

The cost of getting this wrong can add up quickly, even for small businesses.

How do you track the time your staff are working? Does your system round down hours worked? In order to avoid a NMW shortfall, you need to ensure that your staff’s working hours are recorded accurately.

This includes staff clocking in before their shift starts, working through their breaks, or clocking out to undertake training. If your staff leave handovers or have to complete paperwork at the end of their shift, this needs to be done during paid working hours. For example, a care support worker may need to complete documentation at the end of their shift. Are they being paid for this time or not?

Time spent putting on required PPE or Uniform before a shift also classifies as working time and failing to pay for this time can put you at risk of non-compliance.

Due to the increase in NMW rates, you may have salaried staff who are now closer to being at risk of a National Minimum Wage shortfall. For example, shift leaders who do more “off the clock” working hours may fall at risk of dropping below the NMW threshold.

Tracking the hours worked of salaried staff is as important as tracking the working hours for hourly rate staff too.

Also, be mindful of staff who are below the age of 21 who then turn 21 and may be on the incorrect pay rates.

Does your service pay staff for travel time between homecare locations? If not, you risk falling foul of National Minimum Wage compliance. This is particularly prevalent in domiciliary care support settings where care staff are not being paid for travel time, which brings the average hourly rate below legal levels.

Where staff are required to wear a specific uniform / PPE that they must pay for themselves (either directly, or through deductions in their PAYE paycheque), you run the risk of bringing National Minimum Wage paid staff below the legally compliant pay levels.

John is a care support worker who is paid the National Minimum Wage. He works for a domiciliary care company based in Leicestershire. The company John works for covers a large, county-wide geography.

John “clocks in” at 8am, his shift is until 6pm and he has a contractual 30 minute break for his lunch. He works 4 days a week following this shift pattern.

During his shift, John visits 4 different clients, each 30 minute drive from each other.

John is paid for only the hours he is delivering care, not his travel time. He also eats his lunch in the car whilst driving to his next client so he can fit in all his duties before his shift ends.

This means John receives only 8 hours of pay, when he should be receiving the full 10 hours.

He is paid £91.52 a day (8x£11.44)

However, because of the unpaid travel time, his “actual” hourly rate drops to £9.15, bringing him £2.29 an hour below the National Minimum Wage.

Over the course of a month, John accrues a payment shortfall of £293.12.

The penalty charge for just one month from HMRC for this shortfall would be:

£293.12 (full back pay to John)

£586.24 (up to 200% of the full amount)

£100 (minimum fine per worker)

This equals £979.36 in total, per worker, per month.

We can audit your payroll and timesheet systems to ensure that you are not falling foul of National Minimum Wage non-compliance.

We have worked with services of all sizes and complexity, and understand the issues and the nuances to look out for.

If you’d like to discuss your service’s needs, or would like further explanation on National Minimum Wage compliance, book a free consultation with one of our team.