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National Minimum Wage - more important now than ever?

Jasmine Patel, employment law specialist, discusses the importance of the National Minimum Wage 

Posted on 24 January 2017

The National Minimum Wage, which will be renamed the National Living Wage from April 2017 for those aged over 25, was first implemented in 1999 after the passing of the National Minimum Wage Act the previous year.  

It’s still hard to believe that it has only been 18 years since the UK first implemented a national law entitling workers to  a basic  minimum wage for their labour. 

Its implementation is rightfully hailed as a victory for workers’ rights and an important step in the fight to combat exploitation.  

However, as people are increasingly employed in precarious forms of work, having a minimum wage requirement is now more important than it ever was. 

The importance of worker’s rights has been highlighted recently in the legal battle Leigh Day has taken on behalf of Uber drivers.  

Uber drivers are classified as self-employed by their companies but we argued that they were workers and should therefore be entitled to worker’s rights including holiday pay and the national minimum wage. 

The Uber drivers won at the Employment Tribunal and a decision regarding an appeal is awaited. It is very difficult to understand how these drivers could be anything other than workers: my colleague Annie Powell discusses this in further detail here

The Uber case, alongside the similar CitySprint legal challenge, appears to show the lengths to which companies will go to avoid their legal obligations and the requirement to pay the national minimum wage to their workers. 

Unfortunately, even where companies accept that the people who work for them are workers or employees they can still find ways to avoid paying the minimum wage. 

At the beginning of last year, I represented Caroline Barlow in her case against MiHomecare
Caroline was a home care worker and was not paid for the time she spent travelling between her care appointments despite this time clearly being time for which she should have been paid at least the minimum wage. This practice unfortunately appears to be widespread within the care industry and we hope to help others like Caroline in the future.

It seems some employers will come up with almost any excuse not to pay their workers their wage entitlement. 

The Department for Business, Energy and Industrial Strategy has recently published a list of excuses employers have used for not paying the minimum wage including one employer claiming “I thought it was ok to pay foreign workers below the National Minimum Wage as they aren’t British and therefore don’t have the right to be paid it.” 

Perhaps one of the biggest reasons companies continue to fail to pay is that they feel they won’t be caught.

A worker can enforce his or her right to be paid the minimum wage through HMRC or by making a claim either in the civil courts or employment tribunal. 

However, “precarious” workers who fear for their job security are perhaps the least likely to take legal action and risk destabilising their job situation more.  

HMRC’s enforcement team has also been severely inefficient over the years. The Guardian reported in September last year that despite HMRC finding 700 firms who had failed to pay the minimum wage, only three were prosecuted. This type of outcome provides little incentive for some employers to do the right thing. 

Thankfully the government has recently announced a £1.7 million awareness campaign to make sure workers know their minimum wage rights. 

Sir David Metcalf has also been appointed as the first director of the Labour Market Enforcement and it has been reported that he will be considering how the Gangmasters and Labour Abuse Authority (GLAA), the Employment Agency Standards Inspectorate (EAS) and HMRC’s national minimum wage enforcement team can work together to more effectively enforce the NMW. 

This is very welcome news. In October 2016, it was also announced that the former head of Tony Blair’s policy unit, Matthew Taylor, has been commissioned by Theresa May to head a review of workers’ rights and practices. His report will make for interesting reading. 

The hope is of course that the more these issues are highlighted and the minimum wage is enforced, renegade companies will start to change the way they behave towards their workers. 

The minimum wage is also just that: a minimum, and workers in many cases should of course expect to be paid more than just the minimum for the work they do particularly if they live in places with higher living costs such as London. 

Some companies already recognise this. Aldi has announced that it will give more than 3000 staff a pay rise so that they are paid £8.53 per hour and £9.75 per hour if they live in London from February. 

Football clubs are also getting in on the act. In October 2016 Everton football club joined Chelsea in announcing that it would pay all its staff the London Living Wage thereby going some way to address the ludicrous discrepancy between the pay of football clubs backroom staff (many not being paid any more than the minimum amount) and its players, some of whom are paid as much as £615,000 per week. 

What these companies seem to have recognised is that respecting your staff and the work they do by paying a decent wage can make for a happier and more productive work force and in turn, help your business flourish. Perhaps one day, all employers will come to the same conclusion and the need for a legal requirement to have a minimum wage will no longer be necessary.