The National Minimum Wage is the legal minimum hourly pay for workers. Different rates apply depending on the worker’s age and whether they are an apprentice. The National Living Wage is the rate of the National Minimum Wage that applies to workers aged 25 and over and is the highest of the rates.
Each year, the rates of the National Minimum Wage are reviewed and they are usually increased in April each year. This year, the living wage is set to increase from £8.21 to £8.72, a 6.2% rise with the other rates of the minimum wage also seeing increases of up to 6.5%.
Impact on the equestrian sector
It is likely that the equestrian sector, amongst others, will see a rise in prices to ensure businesses can afford to pay the increased National Minimum Wage.
Falling foul of the requirements
It is easy to fall foul of the requirements if you are unsure about whether someone is a ‘worker’. This can be costly if you are an employer. If you have underpaid a worker, in addition to having to pay the affected workers the arrears due, there is also a penalty for the employer to pay which is up to 200% of the arrears owed. There is also a government scheme whereby if the arrears are in excess of £100 then, pending an investigation, the employer may be publicly named and shamed in a government press release.
If all of the following apply, they are likely to be a worker who is entitled to the National Minimum Wage:
- They have a contract or other arrangement which entitles them to a monetary payment or benefit in kind. i.e. not simply the reimbursement of genuine ‘out-of-pocket’ expenses.
- They have to turn up for work even if they do not wish to.
- Their employer has to provide work for them to do for the duration of the contract or other arrangement.
- They have to perform the work or services personally and only have a limited right to send a substitute.
- They are not self-employed. Being registered as self-employed for tax purposes does not necessarily make someone self-employed for National Minimum Wage purposes.
Beware if you take on ‘interns’ or ‘placements’. Just because you agree that they are an intern and working for free or in exchange for developing or maintaining their skills, does not mean that they are not a worker for the purposes of National Minimum Wage.
Q & A for employers in the equestrian sector
Our grooms are contracted to work 40 hours a week and they are paid minimum wage, they often do overtime because they love the horses and don’t mind staying late. Do we need to pay minimum wage for the extra hours?
Yes, the employer must pay at least minimum wage rate for all working time.
Time spent travelling between home and work and time spent on rest breaks are not classed as working time.
Should an employee be paid for time spent travelling to and from a competition?
The answer is probably yes, but it depends where the journey starts.
Travelling to and from a person’s normal place of work is not classed as working time. If they are driving to the stables, which is their normal place of work and then travelling to and from the competition with their employer, the travel from the stables to the competition and back would be classed as working time and the employee should be paid at the minimum wage rate or above.
Some of our employees have a horse on livery and we usually take what is owed from their wages to ensure it is paid on time, is this ok?
If the employee is paid minimum wage and you deduct a payment for livery from their wages before they are paid, it is likely that the employee’s pay will fall below the National Minimum Wage.
It would be best to pay wages first and request the livery payment separate. This way, the payment will not reduce National Minimum Wage below the threshold.
The National Minimum Wage rates change on the 1st April every year. Remember to check that you are applying the most up to date rates as HM Revenue and Customs has the right to carry out checks at any time to see any relevant records. The government website contains information on the most up to date rates and can be found here: https://www.gov.uk/national-minimum-wage-rates
If you think that you might be paying someone at the wrong rate, you should put it right as soon as possible. To reduce the risk of being reported to HMRC by one of your employees, you will need to:
- Identify any arrears you owe your workers
- Pay those arrears back to the workers
- Pay the correct rates going forward.
If you are not sure whether you are paying someone the right rate or you need some help figuring out whether they should be classed as a worker, please contact one of our specialist employment lawyers on 0115 9 100 200 or visit our website.
For more legal information, please do not hesitate to contact www.actons.co.uk. The Leading Equestrian Team, Caroline Bowler and Leanne Bramley are always available to take you call.
NOTE : COVID19. If employers agree new arrangements with their employees, either permanent or temporary, as a consequence of the coronavirus pandemic, they should ensure that employees pay is at leas th level rquired by National Minimum Wage