Pay and Pay Equality | Mayo Wynne Baxter
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Pay and Pay Equality

The British are notoriously bad at discussing money, so the stereotype goes, but pay and pay equality have very much been in the news in recent weeks.

HMRC have released details of the (frankly ridiculous) reasons some employers gave for not paying their workers the minimum wage and at the other end of the spectrum we have Jeremy Corbyn calling for a cap on maximum wages for high earners and Oxfam reporting that the eight richest people in the World control the same amount of wealth between them as the poorest 50% do.

Some of the reasons given by employers to HMRC for not paying their staff the minimum wage reportedly include:

  • She only sweeps the floor and makes tea so she doesn’t deserve to be paid the minimum wage.
  • The employee wasn’t a good worker so I didn’t think they deserved to be paid the minimum wage.
  • I thought foreign workers weren’t entitled to the minimum wage because they aren’t British.
  • My workers are often just on standby when there are no customers in the shop and I only pay them when they are actually serving someone.
  • My workers like to think of themselves as being self employed so the minimum wage doesn’t apply.
  • It is part of UK culture not to pay young workers for the first three months as they have to prove their “worth” first.

In case any readers are wondering, none of these excuses are lawful reasons for not paying the National Minimum Wage (NMW).

In fact not only are there no justifications in law for an employer failing to comply with their legal obligation to pay staff at least the NMW, but the burden of showing that the law has been complied with rests firmly with the employer who should keep records to demonstrate compliance for at least three years.

HMRC are responsible for enforcing the National Minimum Wage and have the power to prosecute and fine employers who don’t comply. They will target employers about whom complaints have been made and carry out investigations of their own, for example having profiled a particularly high risk industry (hairdressers is one example of such an industry). HMRC can carry out inspections at any time and without notice a process that can cause considerable inconvenience to businesses who haven’t kept good records.

The current rates (which are based on a worker’s age) increase from 1 April 2017 as follows:

Now From 1 April 2017
25 and over £7.20 £7.50
21 – 24 £6.95 £7.05
18 – 20 £5.55 £5.60
Under 18 £4.00 £4.05
Apprentice Rate £3.40 £3.50

 

HMRC have launched a campaign to encourage workers to check they are being paid at least the legal rate and HMRC’s enforcement budget has almost doubled recently but with HMRC being criticised just last month for an embarrassingly low prosecution rate, is there any bite behind the current bark?

While employers are always ordered to make good any underpayments, fines imposed by HMRC average out at about 40% of the total amount underpaid despite HMRC having the power to levy penalties of up to 200% of the money owed.

While it is a criminal offence to refuse or wilfully neglect to pay NMW, it has been reported that only three out of around 700 firms were prosecuted for paying below the minimum wage since February 2014.

The 700 companies were named and shamed and with the media becoming more and more vocal about workers rights over recent months it might be the court of public opinion that holds rogue employers to account.

The issue of pay equality will also be in the spotlight this year because of the introduction of the Gender Pay Gap Information Regulations (the Regulations).

Average pay for men is still greater than for women despite The Equal Pay Act 1970 (yes 1970; almost 50 years ago) and it is unlawful (by virtue of the Equality Act 2010) to prevent employees from having discussions about salary if those discussions are to establish whether there are gender based differences in pay.

The gender pay gap is the average difference between men and women’s aggregate hourly pay expressed as a percentage.

Simply put an affected employer needs to work out the difference between the average pay of all male employees and the average pay of all female employees and then divide that number by the average pay of all male employees.

Employers need to take a ‘snapshot’ of pay on the 5 April 2017 (and on the 5 April in subsequent years), analyse those figures and then produce a report within 12 months of the snapshot. The report must be published on both the employer’s website and a government website and must be kept publically available for three years.

Employers are only obliged to comply with the Regulations if they have 250 or more employees but even those with less staff might wish to carry out the exercise as the results may be surprising and if those results do show a gap then steps can be taken to close it before a (costly) equal pay or discrimination claim is bought in the Tribunal.

It remains to be seen whether publication of these figures and the threat of negative publicity will motivate employers to improve their employment practices but it would be a risky strategy for any employer to think that their reports and action they do or don’t take thereafter will go unnoticed.

Whether through an inability to recruit female staff, poor morale in the workplace or Tribunal claims from female employees, the Regulations will certainly have an impact and there are several steps the prudent employer should be taking now in order to prepare.

If you require legal advice on issues around pay, discrimination or indeed any area of employment law please contact Samantha Dickinson of Mayo Wynne Baxter on 01273 223252.

0 responses to “Pay and Pay Equality”

  1. fastcite says:

    The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work.

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