John Lewis breached the strict NMW timing regulations due to its use of pay averaging, which spreads worker pay evenly over the course of the year to provide its partners (John Lewis refers to its employees as partners) with a steady monthly income.
While its contractual rates of pay were never below NMW rates, those on hourly rates had sometimes seen their pay fall below the minimum wage level after working extra hours, technically breaking the rules.
The issue was discovered after a worker raised concerns about their monthly pay following the publication of the firm’s annual results in March.
John Lewis isn’t the only large business to fall foul of the NMW regulations. Firms such as Debenhams and Tesco have also previously been caught out as a result of payroll errors.
These high-profile stories emphasise the importance of ensuring that your business is fully compliant with NMW regulations and show the potential outcome if you fail to comply.
As a reminder, here are the latest hourly NMW rates:
25 and over – £7.50 – known as the National Living Wage
21-24 – £7.05
18-20 – £5.60
Under 18 – £4.05
Apprentices are entitled to an NMW of £3.50 if they’re either:
Apprentices are entitled for the NMW for their age if they are both:
It’s also important to note that whilst the NMW rates are based on hourly pay, if you pay your employees an annual salary, by piece or in other ways, it’s important to ensure that you are still paying NMW rates. The GOV.UK national minimum wage calculator can help you work out what you should be paying your employees.
NMW rates change every April, so it’s vital to ensure you are aware of the latest rates to ensure you don’t get caught out.ital