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Are you paying your employees the minimum wage?

3 September 2015

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 September 3, 2015
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NLW

Are you paying your employees the minimum wage?

It seems that the cost of employing people in the care sector is only going to up in the next few years. In the recent budget George Osborne announced the creation of a new ‘National Living Wage’ of £7.20 per hour for workers aged 25 and over from April 2016, a sharp increase from the current National Minimum Wage (NMW) of £6.50 per hour. Now we have news of an employment tribunal claim against one of the largest care providers in the UK concerning whether they have inadvertently been paying some of their employees less than the minimum wage. If the tribunal finds in favour of the employee it could lead to similar demands from thousands of care workers.

Barlow v MiHomecare

MiHomecare, a care agency with more than 30 branches across the country, is being sued by a former employee, Ms Barlow for alleged failure to pay her the NMW. Ms Barlow was employed to look after elderly, sick or disabled people in their homes and attended an average of eight daily appointments during her four months with the company.

Although her hourly rate was £7.68, well above the current minimum wage, MiHomecare only paid Ms Barlow for the hours she spent giving care. So she was not paid for the time spent travelling between appointments. This resulted in her often working 12 hour days but only being paid for seven hours because travel was not paid. She claims that the travelling time should count as working time and that her employer’s failure to count this time means that she has been paid less than the NMW.

The NMW Regulations

Ms Barlow is the first employee to bring this issue to a tribunal since the new NMW regulations came into force in April 2015. Although the new regulations mainly consolidated numerous existing regulations, they did make some changes to the provisions about what counts as working time.

To calculate whether a worker has received the minimum wage, an employer needs to work out the employee’s average hourly rate by taking the total remuneration earned over the relevant pay reference period and dividing it by the total number of hours worked over that period.

So although Ms Barlow was paid in excess of the minimum wage when attending appointments, if her travelling time was to count as working time, her average hourly rate would be below the minimum wage due to the large part of each working day spent on the road.

Travel time

The regulations state that the hours when a worker is travelling for the purposes of work are to be treated as working time, unless the travelling is between the worker’s home and a place of work or a place where an assignment is carried out. The regulations specifically include hours when the worker is travelling for the purpose of carrying out assignments to be carried out at different places between which the worker is obliged to travel.

So if Ms Barlow can show that each visit to a service user was an assignment and that her travelling was for the purposes of work, which on the face of it does not appear to be difficult, then she is likely to succeed on her claim.

How much could the employer be ordered to pay?

If the employment tribunal finds that Ms Barlow was underpaid, it can require her former employer to pay arrears to Ms Barlow in order to make her pay up to the NMW. For other travelling care sector workers who have been employed and underpaid for much longer than Ms Barlow, they will have the choice of claiming arrears against their employer of up to two years in an employment tribunal or up to six years in a county court.

In my experience there are many care employers who simply do not have the funds to pay carers for their travelling time. If Ms Barlow’s claim leads to demands for travel time to be paid across the sector, it will put even more pressure on care providers’ already tight finances.

If you employ travelling care staff my advice is that you should start reviewing your potential exposure to this issue now and investigate how you could restructure pay for travelling staff going forwards, in a manner that complies with the NMW and is affordable.

Ben Stepney is an Associate Solicitor at Thomson Snell & Passmore LLP, a KiCA sponsor (ben.stepney@ts-p.co.uk)

 

 

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