Not receiving NMW - employer thinks this is ok?!

isabellac

A bit of a long-winded post, but thanks in advance to anyone who can offer advice. I will be visiting the Citizens Advice Bureau tomorrow but would appreciate any constructive comments!

I recently started work for a small family-run company with two stores. I have yet to receive an employment contract, but was informed that I will be receiving a probationary salary for the initial three-month period of my employment. This figure is £13,500pa for a full-time supervisor, but as I am doing 50% of the hours, this equates to £6,750. All good so far.

Last month I worked five eight-hour days and received about £147 after tax. Aged 21, I should be receiving £6.08 per hour as national minimum wage. My employer however has somehow calculated that they will be paying me a daily rate of £37.50, which when divided over the eight hours reaches a grand total of £4.68 per hour. When I highlighted this issue to my manager, she queried it with head office and received the following response from the MD:

"The daily rate is worked out for all days paid to work under a salary, which is to say 365 days per year, as all days off and holiday days are paid days.
Therefore, the probationary salary of £13,500 for a full time supervisor, would be divided by 365 days giving a daily rate of £36.99.

As a 50% supervisor, Isabella would only ever technically be employed for half the year (183 days) which would equal her £6,750 salary if multiplied from the daily rate, so the logic works."

As far as I am aware, irrespective of daily rates and so forth, by working a salary backwards you should be able to calculate an hourly rate that should be equal to or in excess of NMW. I have never heard of this idea that 'all days off and holiday days are paid days'. Has anyone else ever encountered this?

I have spoken to the MD directly over the phone and he maintains that this calculation is correct, and that my hourly rate is irrelevant. He claims that he has spoken to the company which handles all their employment contracts, and they have confirmed that it is entirely legal and right. Somehow I find this hard to believe. I called the Pay & Work Rights helpline, and although not particularly helpful in my specific case, they explained that someone of my age should be receiving NMW and I clearly am not.

I then called the MD again and explained that I had spoken to the helpline. His response was "Well, they're obviously wrong." which I found quite shocking. He further went on to tell me that in all his time running the company, nobody has ever queried the pay as much as I have. Furthermore, the company which organises the pay structure and contracts is supposedly one of the biggest in the country, so I am quite clearly wrong. To put the icing on the cake, the then said "I don't mean to sound condescending, but it's obviously the way you're putting the information across that's causing this issue." Despite his rude manner and tone, I calmly explained that I had done the necessary calculations and did not agree with what he had worked out, and how he had come to that conclusion. I also mentioned that the only information I have given to anybody regarding this has been in his own exact words, as sent to me in the email mentioned earlier. He agreed to send me my employment contract and the other necessary legal documents this weekend, which I have yet to receive. I will be stopping by work tomorrow though so hopefully they will have arrived by then (although I'm not holding my breath).

Has anybody else ever had this problem? I started to doubt myself as he was so adamant about the fact that I was in the wrong, but the more I look at it the less I can understand how he's worked out that it's acceptable to pay anybody in this roundabout manner. Any help/comments would be much appreciated

getmore4less

NMW comes under HMRC.

http://www.hmrc.gov.uk/migrantworkers/nmw.htm


There is a form to fill in.

paddyrg

OK - here's what they are saying, and I think the employer is right.

You are being paid £6750 a year to work a half-week, the same as working a full week for half a year, or £6750 per 183 calendar days.

The daily rate they are using for calculations is then this £37.50-ish figure. But this isn't per WORKING day, but per CALENDAR day. They pay at the same rate on your ~10 days holiday. They pay at the same rate on your weekends. Basically they pay you that per day whether or not you are working, and this is where you are getting confused.

Look at it like this - 183 days contain 52 days of weekend, leaving 131 days. Now say 10 days holiday (50% of 20 days/year) leaving 121 days. That £6750 is actually the pay for 121 days of 8 hrs work. If you did 121 days at 8 hrs at £6.08, you'd only get £5885.44 a year. Even if we remove the holiday from the equation it would be £6371.84/yr.

Don't rock the boat, you're doing alright, way above NMW.

DVardysShadow

paddyrg wrote: »

OK - here's what they are saying, and I think the employer is right.

You are being paid £6750 a year to work a half-week, the same as working a full week for half a year, or £6750 per 183 calendar days.

The daily rate they are using for calculations is then this £37.50-ish figure. But this isn't per WORKING day, but per CALENDAR day. They pay at the same rate on your ~10 days holiday. They pay at the same rate on your weekends. Basically they pay you that per day whether or not you are working, and this is where you are getting confused.

Look at it like this - 183 days contain 52 days of weekend, leaving 131 days. Now say 10 days holiday (50% of 20 days/year) leaving 121 days. That £6750 is actually the pay for 121 days of 8 hrs work. If you did 121 days at 8 hrs at £6.08, you'd only get £5885.44 a year. Even if we remove the holiday from the equation it would be £6371.84/yr.

Don't rock the boat, you're doing alright, way above NMW.

The above is probably right. I think a bigger problem will arise if she works overtime or extra days on this salaried basis, as the margin to falling below NMW is quite slim.

t0rt0ise

So how many hours did you work per week and how much gross pay do you receive? That's all you need to know, never mind muddling it up with days off and holidays.

getmore4less

They have to pay NMW in the pay period which is a maximum of 1 month

So they have underpaid

The problem with the above interpritations they are claiming one method but not actualy paying it.

If they want to use that method, that is for salaried workers and they should anualise and pay in equal installments, not pay based on some average days pay and number of days worked.

http://www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_10037277
http://www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_175105

Business link also has NMW pages.

cr1mson

They are right and they are wrong imho.

If they are going to pay you their daily rate they need to pay you for every day in your case 50% of every day. So saying for ease a month is 30 days each month they should pay you 15 * 37.50 = £562.50.

If the want to pay you only for days worked then they need to pay you at least 6.08 x 40 = £243.20.

They are mixing methods.

C

agrinnall

As getmore4less says your pay should really be split into equal payments across the year - if they pay monthly then that should be 12 lots of £562.50. You really need your statement of employment to know how many hours you are contracted to work each year in order to work out the hourly rate but my rough calculation suggests it's something like £6.49 per hour. I assume your first pay was for a part month, hopefully your first full month's pay will give you a better feel for whether it's right or not.

Overtime is a separate issue that, if you aren't paid it, could drive your hourly rate below NMW, but again you need to see the contractual details to be sure.