The embarrassment must be a PR person’s nightmare. Imagine: you represent a very large national retailer; one that continually advertises on TV, radio and in magazines and newspapers. Then comes the press release from HM Government across all the news media your client has just been included in the latest ’name and shame’ list as the largest of 233 employers across the country who’ve failed to comply with National Minimum Wage (NMW) regulations. Not only does the company have to repay some £1.5m among 12,000 staff to cover underpayments going back four years, but it also admits that the underpayments are more widespread. Oh, and don’t forget the £800,000 fine imposed by HMRC for the original offence. Even if you don’t usually have much time for PR-types, you might feel a little sympathy imagining them trying to put some positive spin on this sort of story.
In case you missed the news, that publicity and fine related to Argos; but they were only the largest and best-known employer ’outed’ by HMRC as having been caught in breach of NMW regulations. In their case it wasn’t a simple ’clerical error’ to blame. In this instance the problem went rather deeper and it just illustrates how HMRC are prepared to dig a little below the obvious nominal pay rate when checking compliance in that it related to what employees were expected to do beyond their official working hours. These employees were required to attend briefings before their shifts formally started, and then undergo security searches after their shifts formally finished. Since the employer didn’t count these times as ’working hours’ the staff didn’t get paid for them. HMRC disagreed (and won).
Argos is not alone
It’s worth noting that Argos isn’t the only large retailer to have been involved in this type of ’on-the-clock’ or ’off-the-clock’ dispute in recent years. Other employers have also been accused of making staff go through various unpaid but obligatory procedures before and after their formal shift times.
Consider the practices of shift handover, cashing up or stock checking which are common to petrol retailing. Historically it’s been quite standard practice for customer-facing employees who’ve just ended their shift to have to stay and reconcile their cash balance. Meanwhile, the employee about to start his or her shift is often required to carry out some stock checking. So there’ll be a couple of times during the day when there are several more staff around than usual, doing the routine shift change or handover procedure. And if anyone has a problem in balancing their shift takings against cash, or trying to account for stock that’s disappeared, this handover period can be quite protracted. The big question then is who (if anyone) is getting paid for this period before or after their shift?
As far as the 233 businesses on the latest ’name and shame’ list goes, there were actually only a couple that could be immediately identified as petrol forecourts (one in North Yorkshire and another in Birmingham) alongside another half dozen or so that were either motor workshops or hand car washes. But there’s really no case for complacency among petrol retailers. As we’ve said so often, the petrol retail business is somewhat odd in that as far as the public are concerned the only thing they remember about any petrol station is the brand on the pole sign. They don’t care who owns it. Any single site found to be failing to comply with NMW regulations among a network of several hundred is likely to find itself named as ’[Insert Big Brand here] Service Station’ in media reports, regardless of who actually operates it.
For the record
FYI, current National Minimum/Living Wage rates in force since April 2017 are:
Age 25 and over£7.50/hour
Age under 18£4.05/hour
If you’re unsure whether your nominal pay rates comply, ask your accountant or payroll service provider. Even if the rates appear correct, consider your day-to-day working practices: do you expect staff to regularly ’work’ beyond their formal paid hours? If you’re not sure, you should again talk to your payroll service provider, although they may well extend that discussion to include specialist HR advisors. Better to check before HMRC ask to review your payroll records: not only are the potential fines significant, but you don’t want to be named and shamed next time.