National Minimum Wage – unintentional breach

Recent headlines regarding Monsoon Accessorize where they unintentionally failed to ensure their staff were paid the NMW. highlights a risk that more employers could find themselves in a similar position.
Monsoon Accessorize have been forced to reimburse staff pay and have been fined £28,147.81
The Company are currently working with HMRC and reviewing its payroll processes in order to rectify the breach of pay regulations.

The case: Monsoon requires their staff to wear Monsoon clothes on duty, employees were previously required to purchase clothing but received these at a discounted rate out of their wages, but the compulsory expense meant that many staff were taking home less than the legally required minimum wage.

Foot Locker and French Connection have both failed to pay the minimum wage for the same reason.

It is important that employee benefits are not counted towards a workers average salary.
The strict legal obligation is to ensure that an employee’s average salary over a pay reference period (the interval in which they are paid) does not fall below the minimum. That figure must be calculated after a number of specified deductions and there is a list of items which by law cannot count towards the NMW, these include overtime rates, expenses, allowances, vouchers, loan and wage advances and any other benefit in kind (other than accommodation).

If you offer any additional payments or benefits you need to ensure that you are paying at least the NMW, after appropriate deductions have been made from the calculation.