National Minimum Wage

In the latest of our 'Back to Basics' series Employment Solicitor Emmie Ellison provides an overview of considerations employers should take when calculating National Minimum Wage.

So I'm going to give an overview of considerations employers should take when calculating national minimum wage. The calculation for national minimum wage consists of gross payments from the employer to the employee in a pay reference period less any deductions.

Deductions have been an in vogue topic this year in relation to uniform requirements. This was following an HMRC publication which named employers whose employees' remuneration fell beneath the national minimum wage. Therefore, if you require your staff to buy a uniform or contribute towards the purchase of a uniform, you should ensure that these contributions do not fall beneath national minimum wage. You cannot get around this, for example, by deducting over various pay dates, even if this would mean that the employee's minimum wage is met or even above this, and this is because the cost must be deducted in the pay reference date which it is incurred.

It is common in some sectors, for example hospitality or retail, to have particular types or colour of uniform, for example black jeans. Again, this would be a required uniform, and formal uniform policy rules should be applied.

So if you bring the focus back to the calculation of national minimum wage, the number of hours worked by a worker in a pay reference period is calculated differently depending on the type of work done, whether this be salaried hours work, output work, time work, or unmeasured work. Therefore, it is important to correctly identify what type of work an employee is doing or a worker is doing as this may give rise to an incorrect classification if the wrong type is applied.

If we consider the case of Tomlinson-Blake v. Mencap, this looked at whether sleep-in shifts, workers were entitled to national minimum wage during that time. The Employment Tribunal and the Employment Appeal Tribunal held that for the entire of the sleep-in shift, this was time worked, therefore national minimum wage should be applied.

Mencap appealed this decision to the Court of Appeal, and they held that on straightforward reading of the National Minimum Wage Regulations 2015, that there is a difference between being available for work and actual work. Therefore, national minimum wage should only be applied to time when the employee or worker was actually awake or required to be awake for performing a specific task.

The claimant has appealed this decision to the Supreme Court, which is due to be heard in February 2020. So we're expecting a decision in July 2020. And we hope that we'll get further interpretation on how these regulations are to be applied in the upcoming year.