Employers "named and shamed" for failure to pay the National Minimum Wage

On 9 March 2018 the Department for Business, Energy and Industrial Strategy named and shamed 179 employers for paying their staff below the National Minimum Wage (NMW). Restaurant chain Wagamama topped the list, but claimed that a misunderstanding as to how the NMW Regulations apply to staff uniforms was to blame.
For some time Wagamama have required their front of house staff to wear black jeans or a black skirt with a branded top. However, the business failed to realise that this requirement constitutes a “uniform” under the NMW Regulations 2015, meaning employees should have been reimbursed for the cost of purchasing these items. According to Wagamama’s press release, this misunderstanding accounted for why their staff were not being paid as much as they should have been. However, Wagamama does not appear to be alone in their misunderstanding of this topic: the NMW Regulations and their associated requirements are a commonly misunderstood issue amongst businesses.
When calculating an employee’s total remuneration for the purposes of the NMW, the Guidance is very broad and suggests that any expenses, allowances or other sums spent “in connection with” a worker’s employment should be deducted from the calculation. However, the NMW Regulations take a slightly different approach, stating that only where an employee is “required” to spend their wages on items in connection with their employment (for example, buying a uniform) should the money spent be deducted. Further, in both cases an employer cannot deduct these sums from the worker’s pay if it would reduce the overall level below the NMW – it was on this last point that Wagamama fell short of their legal requirements.
This can be a tricky issue for employers, who could not only face negative publicity by being “named and shamed” for failing to pay the NMW, but might also be fined up to £20,000 and face criminal sanctions. Moving forward, employers should familiarise themselves with Regulation 10-15 of the NMW Regulations, which list the payments that can and cannot be deducted from an employee’s total gross pay.

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Elizabeth Marshall

About Elizabeth Marshall

Elizabeth is a senior associate in the People, Reward and Mobility practice of Dentons' London office, specializing in employment law. Elizabeth works closely with national and international organizations, as well as senior executives, and has more than 10 years of experience advising on the full range of employment law issues, having qualified in 2010.

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