Minimum wage calculation TRAP

A very good friend of mine Alison from Metis HR – www.metishr.co.uk raised a very potentially worrying scenario on calculating an employee’s minimum wage if they are paid monthly:

Scenario

The National Minimum Wage for those over 25 is £7.50. If you employ someone over 25 on a 25 hour per week contract their weekly gross pay is 25 x £7.50 = £187.50. You may have calculated their monthly salary by multiplying their weekly wage by 52 (£9750) and dividing by 12 to get a monthly salary of £812.50.

However HMRC are now pursuing the line that there are not 52 weeks in the year there are 52.14 and if, as in the scenario above, you are calculating pay in this way you may not be paying National Minimum Wage and may, therefore, be breaking the law.

In the scenario above this person actually works 25 hours x 52.14 weeks = 1303.5 hours per year. If you divide the annual salary (£9750) by hours worked (1303.5) you are only paying £7.48 per hour. You are not, in this scenario, paying the National Minimum Wage. My payroll contact told me the story of a client who was prosecuted for paying £0.02 under the National Minimum Wage and named and shamed on their website as an employer who doesn’t pay minimum wage.

This scenario applies to all ages of employees and their appropriate National Minimum Wage.

Mediation is now a real option for dispute resolution

The latest developments that will make mediation the preferred tool for dispute resolution

1. Briggs LJ has completed his review of the Structure of the Civil Courts and the outcome is that he recommends pressing ahead with a national court mediation service and the Online Solutions Court which will include mediation in its processes.  He has said that he wants to take the “A” out of “ADR.”

2. The Alternative Dispute Resolution Directive and Online Dispute Resolution Platform, which we will still need to comply with if we exit the EU and wish to trade with EU states.

3. The creation of the Small Business Commissioner, which will signpost to mediation

4. Increased Court fees and Court closures, leading to delays.

Holiday Pay Entitlement

Supreme Court ends British Gas holiday pay challenge

Thousands of working people – whose wages include an element of commission – will now be quids in following the Supreme Court decision today (Tuesday) to refuse British Gas the right to appeal in the Joe Lock holiday pay case, says UNISON.

But the union has warned that the decision, based on the Working Time Directive, could be at risk if the UK government opts for a hard Brexit.

Last autumn, the Court of Appeal found in favour of the UNISON-backed case, but British Gas’s decision to continue its challenge meant employees across the UK have had to wait a little longer to learn the outcome.

But now anyone whose wages include an element of commission can no longer be paid less when they are on annual leave. The amount employees get for their holiday must be based on both their basic pay and any commission they earn.

Commenting on the Supreme Court decision, UNISON general secretary Dave Prentis said: “It’s taken nearly five years to get here, but now all employees who earn commission will see that reflected in their holiday pay.

“Until now, many whose wages included commission lost a lot of money whenever they took a holiday. Many simply couldn’t afford to go away. Today’s decision puts right that wrong.

“But this is an employment right based on a European directive, something that could well disappear once the UK finds itself outside the EU. The government must prove it’s on the side of ordinary workers by showing how it’s going to protect all rights such as these.”

Personal Injury Claims

Change to Discount Rate for Personal Injury Damages

Occasionally, employment tribunals award personal injury damages in discrimination and detriment cases.

If an (ex-) employee has a serious long term medical condition and is being awarded a sum of money for long-term loss of earnings, a ‘discount rate’ is applied to reflect the fact that the employee receives several years’ loss of earnings up front (and thus can be expected to earn money on the lump sum by investing it.)

The discount rate has been set at 2.5% for over 15 years, during which time interest rates and gilt returns have plummeted. The government has today, announced, it is being reduced to minus 0.75%. This will have the effect of increasing awards for long-term loss of earnings for personal injury in discrimination and detriment cases.

Getting paid for the Job is a major problem

A steady cash flow is vital to a fledgling business, so making sure customers pay you on time is crucial. Written payment terms are an absolute must, but businesses of all sizes should also have a payment enforcement strategy in place. This covers internal methods for chasing debts and knowing when to consult debt collection services or a solicitor for advice. Practically, having a payment-on-account policy for full or partial payment before services are rendered is a good way of avoiding lengthy debt collection procedures.

Employment Update

The Ministry of Justice has launched its website of employment tribunal decisions. About 100 decisions from 2016 are already up there, and you can search by name, date, judge or jurisdiction code.

This is a real step forward for putting important information in the public domain. However, there are a couple of downsides. First, it makes it easy for employers to search to see if someone they are thinking about recruiting has taken a previous employer to the tribunal. Second, it means that any party with adverse findings will now find those criticisms popping up on a google search (Daniel Barnett)