Employers minimum-wage shame list and how it affects freelancers

From an HMG press release earlier today:

Today (Thursday 5 August) 191 businesses are being named for breaking the national minimum wage law.

Following investigations by Her Majesty’s Revenue and Customs, a total of £2.1 million was found to be owed to over 34,000 workers.

The breaches took place between 2011 and 2018. Named employers have since been made to pay back what they owed, and were fined an additional £3.2 million, showing it is never acceptable to underpay workers.

This has an interesting twist for a freelancer though.

Here’s why: using an example, the relevant legal minimum wage rate varies depending on circumstances, but in this case, if a worker is 23 or over, so the National Living Wage applies, and this is currently £8.91. an hour.

Now imagine this person is hired to work for one 10 hour day (with an unpaid hour for lunch). You would think that the minimum wage for this person is £89.10, wouldn’t you?

If you did, you would be wrong. The correct minimum wage rate would be £89.10 + a provision for holiday pay that is calculated at 12.07% of the amount paid. (It is usually rounded up to 12.1%)

So £10.75 should be added to allow this person to save up for the paid holiday that every worker is entitled to from day one of their employment thanks to Bectu legal action in 2001). The minimum rate for working ten hours is actually £99.85.

An important qualifying point here though. As the recent Pimlico Plumbers case showed, it is very important that a worker brings their claim for holiday pay within the employment tribunal time limits.

You must make your claim at least 3 months less 1 day of the last time your employer either made an unauthorised deduction from your pay, or did not pay you at all when they should have.

One other thing here; I have periodically been asked about this by members who thought they had a case before they realised that a day that lasts 11 elapsed hours (i.e. 8am – 7pm) is only a ten-hour working day because it included an unpaid hour for lunch.

We are always interested in helping members report this, but the fact that you are now entitled to a written statement of particulars before you start work means that this can be picked up before you start to work for a low-paying engager.

(tip on the press release: Adam Flanders)