It's been hard to miss the recent furore surrounding Mike Ashley of Sports Direct; the controversial working practices he operated and his company not paying staff the minimum wage. The latest update is that workers at its Derbyshire base will receive back-pay of about £1m for non-payment of the minimum wage, according to Unite.
The focus on the company, combined with Brexit and talk of the changes it might bring for employment law, means it's high time we revisited the relevant law in this area.
Rest breaks
Under the Working Time Regulations 1998 (WTR) a worker is entitled to a 20-minute break if they work more than six hours, and 11 hours of uninterrupted rest per day (workers under 18-years-old are entitled to more).
Working time is any period when an employee is working, carrying out their duties, and at their employer's disposal (all three elements need to be present). It includes any time that someone receives relevant training or as per a relevant agreement.
Paid overtime, time spent on call in the workplace, travel as part of a job and working lunches all amount to working time, whereas rest breaks, annual leave, work-related social events, and travel to work are not (with exceptions for peripatetic workers). There will always be situations when the position on working time is unclear, however.
The WTR implement the EU Working Time Directive (WTD) and are likely to remain unchanged for the next two years while the UK negotiates an exit deal with the EU. Whether they survive after that will depend heavily on any trade deal. A Swiss or Norwegian model retaining access to the single market will still require compliance with the WTD and judgments of the European Court of Justice.
Pay
The employment contract will usually determine pay, as long as it is above the national minimum wage (and National Living Wage for those aged over 25). The minimum wage also specifies which hours should be paid (with different rules from the WTR).
But where, as in the case of Sports Direct, an employer carries out security checks after an employee's shift has ended, should they be paid for this time? The answer is yes, because the employee is still at their employer's disposal. Any time out of contracted hours where the employee is not free to leave or carrying out their employer's instructions should be paid time. Failure to pay for this time could lead to a breach of the NMW and/or a claim of unlawful deduction from wages.
What about making deductions if, for example, an individual is late? This will depend – is the deduction specifically authorised by contract or some other agreement? If so then there is no unlawful deduction. But employers need to bear in mind the potential for poor employee/public relations, and instead should consider allowing staff to make up the time lost. Being flexible and trusting people should lead to a more productive workforce.
The national minimum was introduced independently by the UK and shouldn't be affected by 'Brexit'.
Remedies available
Both working time regulations and national minimum wage rights apply to 'workers' as well as employees. So what if these rights have been breached?
If an individual believes they have not been provided with adequate rest breaks or annual leave a declaration can be sought from an employment tribunal. Compensation may also be awarded. An injury to feelings award is not payable, as the recent case of Santos Gomes v Higher Level Care confirmed.
For the national minimum wage, an individual can bring a claim of unlawful deductions and/or breach of contract (potentially going back six years), and complain to HMRC.
In addition there is the right not to be dismissed or subjected to a detriment where the reason or principal reason is in connection with:
- refusing to forgo a right such as limits on working time, rest breaks or annual leave;
- being/becoming eligible for the NMW or a particular rate of it; or
- alleging breach of a right under the WTR/NMW or taking action to enforce it.
Employers should be aware of the risks of not complying in addition to compensation. Not only is there potential damage to an organisation's reputation (including 'naming and shaming'), but in some cases uncapped financial penalties can also be imposed along with custodial sentences.
Vicky Schollar is a senior solicitor at Blake Morgan