• Lee Calver
  • 11 June 2014

Boss hits back after inclusion on Government’s list of employers failing to pay minimum wage

As reported yesterday, HSS Hire is seeking legal advice after the Government included its name on a list of employers who it said was failing to pay employees the minimum wage. HSS maintained that due to an administrative error, underpayment of £150 was made to employees over the course of a month, and was immediately rectified. Despite making a genuine mistake, the tool hire company was included on HMRC’s ‘name and shame’ list of companies flouting Minimum Wage Regulations.

The question we posed following the response by HSS was ‘how long would it take for other companies on the list to raise grievances?’ And it appears that the Government could be set to receive a number of complaints in the coming days.

A Wirral hairdressers, which was among the 25 employers ‘named and shamed’ by the Government, underpaid three workers a total of £7,310.65. However, Nicola Banks, Co-Owner of Renaissance in Heswall has responded angrily, stating it was a genuine error.

Revealing details of its situation, Nicola explained:

“We have been in business for 23 years operating a reputable hairdressers in Heswall. Over the years we have employed many stylists, trainees and apprentices and have always believed we have been paying the correct wages. We have never had any claims previously or any complaints made against us for breaching any legislation.”

Continuing, she said:

“In November last year we received a Notice of Underpayment out of the blue and without any of our staff having raised previously with us that they did not believe they were receiving the correct wages. 

“We were shocked to receive the Notice and cooperated fully with HMRC’s enquiry. When it became clear that we had been paying the incorrect wages to three of our apprentices we immediately paid the arrears and apologised for the mistake that led to the pay being incorrect. 

“In fact, our current apprentice is still employed with us and was unaware of the issue until we brought it to her attention. We fully intend to continue to support and develop her skills and continue supporting skills development in our community.”

Nicola explained that the mistake occurred due to difficulties following the Government’s advice on apprentices on the PAYE website. She stated:

“The issue arose in the context of apprenticeships only. We absolutely believed we were following the requirements of the new Government apprenticeship scheme and we agreed the rates of pay with the apprentices and their college Wirral Metropolitan College. 

“Apprentice wages are a particularly complex area and in my view the Government’s own website is not the clearest in this regard. This was a genuine mistake on our part and as soon as we realised the error we took immediate steps to rectify the situation.”

Revealing that it did not expect to be publicly attacked for its genuine error, Ms Banks said:

“We were not made aware that our names would be published in a press release under the new BIS policy. We assumed naively that dealing with the issue quickly and responsibly would be the end of the matter. The first we heard that our individual names and the name of our business were to be published in a press release was when a reporter from the Sunday Mirror came into the salon on Saturday.

“As you will no doubt be aware, the BIS policy changed for investigations initiated after 1 October 2013 (the wages in question were for the year ending 31 August 2013). My understanding is that previously, ‘naming and shaming’ would only arise if there was flagrant flouting of the law, failure to cooperate and deliberate acts to short change staff. We made a mistake in interpreting the rules applying to apprenticeships and even though this was a genuine mistake with no intent to short change our staff, we have been publicly ‘named and shamed’ with no context or background to the claims.

“The Government has made it clear it does not care if employers make a genuine mistake, it will ‘name and shame’ regardless.”

After being included on the list, Nicola warned that employers need to be extra careful and vigilant in the future when it comes to paying staff. Offering guidance, she said:

“Our advice to anyone employing apprentices would be to seek clarification from HMRC in relation to each and every one of your employees to ensure that you are paying the apprentices the correct wages. 

“The person we dealt with at HMRC told us that the majority of the claims arose in respect of apprentices and we believe that we are probably not the only ones who thought we were paying the correct wages. Do not rely on your own interpretation of the rules for apprentices because if you get it wrong you could be ‘named and shamed’ as we were.”

Ms Banks went onto reveal that the press following the publishing of the list has been extremely harmful.

“We were particularly upset to see in some of the press articles that alongside the list of ‘named and shamed’ were quotes from the TUC leader calling for employers who are ‘cheats’, ‘crooks’ and ‘immoral’ and who flout the laws to be named and shamed.

“To be a ‘crook’ or ‘immoral’ implies you would know that what you are doing is illegal and wrong. That is not the case here. There was no deliberate intent to pay our employees less than they are owed.”

She added:

“Small businesses like ours do not have a team of Accountants, HR Managers and Lawyers to advise them. I note with interest that some of the worst offenders, much larger organisations, were not ‘named and shamed’ and probably have a whole team of experts fighting their corner. We feel that we have been vilified for a genuine error and are very worried that the business will suffer such reputational damage that it will not be able to continue.”

The worry now according to Nicola is that employers will be put off hiring apprentices in the future.

“Employing apprentices gives people a chance to learn, earn and develop – being vilified for a simple mistake that you rectified immediately could actually damage the apprenticeship programme in the long run.”

Is your business on the list? Do you think the Government should be more lenient on those who have made a genuine mistake? Join in our discussion here.