Why paying the minimum wage matters

It’s not just that you’re breaking the law by paying employees less than the minimum wage; it’s that you are adversely impacting your staff’s ability to maintain a lifestyle above the poverty level.

Several recent national stories have highlighted the need for employers to be responsible and pay every member of staff the applicable minimum wage.  A study by the Child Poverty Action Group discovered that a couple with two children, working full time and being paid the National Living Wage – which is only available to those over 25 – would still be £49 per week short of the income needed to provide their family with a basic lifestyle. A single parent on the same wage would be £74 short every week.

Whilst these figures are an improvement on last year’s results, they still show a significant shortfall for people in full-time work on the National Living Wage pay scale. So the fact that some high street names have been fined recently for not even paying the National Living or Minimum Wage should come as a wake-up call to all employers.

Fines for not paying the minimum wage

Card Factory, Wyvale Garden Centres and the Odeon & UCI Cinema Group  are amongst nearly 240 employers who were found to be paying some employees less than the national minimum wage of £7.38 per hour (for 21-24 year olds) and the National Living Wage, which is £7.83 for those over 25.

Whilst employees might have been paid at these rates by the companies in question, they have faced deductions for things like uniform, have not been paid for appropriate travel expenses or have had their pay periods miscalculated. Employers who fail to pay their staff properly face significant fines – HMRC fined the companies involved in the latest underpayment investigation a total of £1.97m, saying that a total of 22,400 workers were underpaid by £1.44m. All staff must be reimbursed the monies they have lost.

Give those over 18 the National Minimum Wage?

In July this year, Holly Lynch MP put a private member’s bill before the government to request that all workers over the age of 18 receive the National Living Wage instead of the graded National Minimum Wage until the age of 25. The House of Commons Library released analysis that showed that a worker aged 25 would be paid £3,774 more per year as an 18-year-old working the same hours.

But for employers, any increase in minimum wages set by the government represents a potentially significant increase in costs and whilst most employers say that they believe in pay equality, they will also be paying close attention to their margins – particularly those smaller businesses who rely on lower wages to help balance the books.

To find out more about ensuring you have a fair pay structure as part of your corporate culture, contact us today.

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