How can we establish if we have been paying staff less than the minimum wage? How can we establish if we have been paying staff less than the minimum wage?

How can we establish if we have been paying staff less than the minimum wage?
31 Aug 2017

Q. I am the only person looking after payroll for a small engineering company with just under 100 employees. Last week, one of our staff members, who work a standard 35 hour week, spoke to our HR manager as we have been paying him less than the statutory minimum wage. The situation appears to have been sorted out, but we are worried about finding other people in the same boat. What is the best way to do so quickly in order to avoid further embarrassment?

I understand from our further correspondence that you have no proprietary HR system and that your HR records are kept on spreadsheets.

So the simplest way to get hold of the information you need is to establish what the current minimum wage levels are in your country and then produce a spreadsheet with the following information headings:

Employee Number, Date of birth, Hours per week & Annual salary

Sort the report in ascending date order as doing so will give you the oldest first and the youngest last, as shown in the example extract below:

Employee Number     

Date of birth

Hours per week

Annual salary

123567

13.06.87

35

14300

134889

19.04.91

30

11,250

127866

31.01.94

35

13,025

119443

31.12.98

35

10,000

129525

07.04.99

35

7,500

137706

13.06.99

25

7,280

139921

08.11.00

17.5

3,500

 

From here, you can take a number of approaches, but the easiest from a reference point of view is to set up the calculation in your spreadsheet in order to determine the hourly wage of each staff member - divide their salary by 52 weeks x hours worked and compare it to the minimum wage for that age group. For example, in the UK, current minimum wage levels are:

Group 1

Age 25 and over

£7 .50 per hour

Group 2

Age 21-24

£7 .05 per hour

Group 3

Age 18-20

£5.60 per hour

Group 4

Age under 18

£ 4.05 per hour

 

Using the figures above as the basis of the calculation, this is what your report would  look like:

Employee Number   

Date of birth

Hours per week

Annual salary

Hourly rate in £

123567 13.06.87 35 14300 7.86
134889  19.04.91 30 11,250 7.21
127866 31.01.94 35 13,025 7.16
119443 31.12.98 35 10,000 5.49
129525 07.04.99 35 7,500 4.12
1377 06 13.06.99 25 7,280 5.6
139921 08.11.00 17.5 3,500 5.74

 

Employee ages at that point will depend on the date you run the report, but broadly speaking, we can see from the above that three employees were not paid in compliance with the law. Also remember that if overtime is paid at a multiple of the hourly rate, retrospective compensation will need to be paid there too.

As for the future, it is incumbent upon your HR colleagues to check that pay rates contained in job offers are in compliance with the regulations. It is your role to execute on the instructions given to you to pay that rate. But perhaps it might make sense to talk the situation through with your HR colleagues.

While most employees will be happy to be compensated for any oversight, there might always be one who is not so easy to appease. Therefore, the earlier this situation is checked and sorted out, the better.

Denis Barnard, the founder of the Global Payroll Association's HRcomparison.com, investigates what to do should you discover you have accidentally fallen foul of the law.

Please drop Denis a line at denis.barnard@hrmeansbusiness.com if you require help with any of your tech  trials and tribulations and he will be happy to answer  your queries here.l

 

Q. I am the only person looking after payroll for a small engineering company with just under 100 employees. Last week, one of our staff members, who work a standard 35 hour week, spoke to our HR manager as we have been paying him less than the statutory minimum wage. The situation appears to have been sorted out, but we are worried about finding other people in the same boat. What is the best way to do so quickly in order to avoid further embarrassment?

I understand from our further correspondence that you have no proprietary HR system and that your HR records are kept on spreadsheets.

So the simplest way to get hold of the information you need is to establish what the current minimum wage levels are in your country and then produce a spreadsheet with the following information headings:

Employee Number, Date of birth, Hours per week & Annual salary

Sort the report in ascending date order as doing so will give you the oldest first and the youngest last, as shown in the example extract below:

Employee Number     

Date of birth

Hours per week

Annual salary

123567

13.06.87

35

14300

134889

19.04.91

30

11,250

127866

31.01.94

35

13,025

119443

31.12.98

35

10,000

129525

07.04.99

35

7,500

137706

13.06.99

25

7,280

139921

08.11.00

17.5

3,500

 

From here, you can take a number of approaches, but the easiest from a reference point of view is to set up the calculation in your spreadsheet in order to determine the hourly wage of each staff member - divide their salary by 52 weeks x hours worked and compare it to the minimum wage for that age group. For example, in the UK, current minimum wage levels are:

Group 1

Age 25 and over

£7 .50 per hour

Group 2

Age 21-24

£7 .05 per hour

Group 3

Age 18-20

£5.60 per hour

Group 4

Age under 18

£ 4.05 per hour

 

Using the figures above as the basis of the calculation, this is what your report would  look like:

Employee Number   

Date of birth

Hours per week

Annual salary

Hourly rate in £

123567 13.06.87 35 14300 7.86
134889  19.04.91 30 11,250 7.21
127866 31.01.94 35 13,025 7.16
119443 31.12.98 35 10,000 5.49
129525 07.04.99 35 7,500 4.12
1377 06 13.06.99 25 7,280 5.6
139921 08.11.00 17.5 3,500 5.74

 

Employee ages at that point will depend on the date you run the report, but broadly speaking, we can see from the above that three employees were not paid in compliance with the law. Also remember that if overtime is paid at a multiple of the hourly rate, retrospective compensation will need to be paid there too.

As for the future, it is incumbent upon your HR colleagues to check that pay rates contained in job offers are in compliance with the regulations. It is your role to execute on the instructions given to you to pay that rate. But perhaps it might make sense to talk the situation through with your HR colleagues.

While most employees will be happy to be compensated for any oversight, there might always be one who is not so easy to appease. Therefore, the earlier this situation is checked and sorted out, the better.

Denis Barnard, the founder of the Global Payroll Association's HRcomparison.com, investigates what to do should you discover you have accidentally fallen foul of the law.

Please drop Denis a line at denis.barnard@hrmeansbusiness.com if you require help with any of your tech  trials and tribulations and he will be happy to answer  your queries here.l

 

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