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Are You Being Underpaid? Martin Lewis Outlines How You Might Be!

Martin Lewis has recently given guidance on your rights in regards to the national living wage. It's well worth a read, as you may be surprised what the act covers!

Here's what Martin has said:

The UK minimum wage increased on 1 April - upping incomes for the lowest-paid workers. Yet many who think they are on minimum wage are, in reality, actually being paid LESS than they should. The Low Pay Commission believes this could be almost half a million people. I want to give you a flavour of the rules here, though it's far better to read our detailed new National minimum wage: are you being paid enough? guide

What is the national minimum wage?

The 'national minimum wage' is the legal minimum an employer can pay anyone working in any UK nation. The rates go up on 1 April each year. The national minimum wage ISN'T optional. Regardless of your contract, your employer has to pay you the right amount – otherwise, they're breaking the law. The main exception is if you work for yourself. The current rates are:

Eight ways you may be being underpaid on minimum wage

If you're paid the legal minimum (as 2.5 million people in the UK are), there's no wriggle room in your salary. So any mistakes, like unpaid working time or wage deductions, put you at risk of being underpaid. Many who believe they are on minimum wage are, in reality, being paid less than they should be. While bad bosses refusing to pay proper wages are an issue, most of the time, underpayments happen by mistake. Look out for the following eight things to make sure you're not being underpaid: 1. Uniform or safety equipment shouldn't take you below minimum wage If you need to buy things to do your job – like tools, safety clothing, or uniform (including dress-code appropriate clothes) – your employer must make sure any costs don't cause your wage to drop below the legal minimum. It doesn't matter how you pay for it: if you buy it in a shop, make a payment to your employer, or have the costs deducted from your salary – it all counts. 2. You should be paid for ALL your working time This includes overtime, training time, travelling time, waiting time, and regular 'slivers' of time added on to shifts, such as being asked to arrive early to open up or queuing to pass through security checks. 'Unpaid working time' also includes time spent on call at your workplace and time spent travelling (if it's part of your job). For example, if you're a social worker doing home visits, your salary must cover the time it takes you to travel between your client's homes and the time you spend with them. For example, Bobby Barista works in a coffee shop and is paid the national minimum wage. If he's working the first shift of the day, he's required to arrive early to help open up. This happens about twice a week and takes 15-20 minutes each time. Because his boss doesn't pay for this extra time, Bobby's pay for these shifts falls below the legal minimum.

3. You should get a pay rise each April (and on certain birthdays) The minimum wage rates increase each year on 1 April, and you'll also see an increase when you turn 18, 21 and 23 (when you start to get the confusingly-named 'national living wage'). You should expect to receive your pay rise from the first full pay cycle after an increase comes in. So, if you're paid monthly, you should be paid the new rate from the first full month of work that comes after the increase. If you're an apprentice, aged 19 or over, AND have completed the first year of your apprenticeship, you should also be paid the national minimum wage for your age, NOT the lower apprentice wage.

4. If your employer provides you with accommodation, it can reduce your pay – but only by a set amount There are complicated rules when it comes to housing provided by employers. This CAN be taken into account when working out whether you've been paid the correct minimum wage or not - and you could be paid LESS than the minimum wage (for your age) in exchange for providing you with somewhere to live. This is called 'offsetting'. But your weekly salary can only be reduced by a maximum of £60.90 a week below the minimum wage. Any housing costs over this amount CAN NOT be 'offset' against your salary. So, if your employer charges more than £60.90 a week for the housing they provide, they have to make sure that your base salary is high enough to ensure you're still getting the correct minimum wage rate for your age. On top of providing a place to live, things that can count as 'accommodation charges' include rent, gas, electricity, furniture and laundry.

Freddie Farmhand is a 27-year-old farmworker who earns £468 a week for 48 hours of work. This works out to be £9.75 an hour (more than the current national living wage: £9.50). However, Freddie lives in accommodation provided by his employer. He's charged £107 a week for rent and utilities, which he gives his boss after being paid. This impacts how we figure out whether Freddie's getting a national living wage. We now have to take away the accommodation cost from the amount he earns: £468 (Freddie's weekly pay) – £107 (weekly housing charge) = £361. We then have to add the accommodation offset (£60.90), the amount Freddie's employer is legally allowed to reduce Freddie's wage by to pay for accommodation costs. So: £361 + £60.90 = £421.90. From this figure, we can work out Freddie's actual hourly salary: £421.90 divided by 48 hours gives an hourly rate of £8.79. This is LESS THAN the minimum wage Freddie is legally entitled to, so Freddie is being underpaid. 5. Employers can't 'top you up' with tips or overtime These CAN'T be used to 'top up' your pay – any tips or commission payments must be on top of the legal minimum wage for your age, regardless of whether they're paid through your payroll or given to you by customers. If your contract says that you'll get a base salary plus commission, your 'base salary' must be AT LEAST the national minimum wage rate for your age. Phone If you're paid at a higher rate for overtime or certain shifts (such as night shifts or bank holidays), the extra amount you're paid can't be used to 'top up' your pay to meet the minimum wage. Your standard hourly rate must be AT LEAST the national minimum wage rate for your age. 6. Being a commission-only worker doesn't mean you can be paid less than minimum wage If you are in a 'commission-only' role, you still have to be paid the correct national minimum wage rate. If you don't make enough commission during a pay reference period (the amount of time your paychecks cover), your employer must top up your pay to make sure you get at least the legal minimum. The way this is worked out varies depending on your contract. It's either based on a 'fair' estimate of how long it should take you to do your work, or if you're required to work a fixed number of hours, you'll be due the legal minimum wage for these hours.

Phone 7. Don't think 'I work for a big firm, so it must be correct.' It’s not just small or new companies that fall foul of the rules. In 2021, 191 companies – including big names like John Lewis, The Body Shop International, and Sheffield United FC – were ‘named and shamed’ by the Government for failing to pay their employees correctly.

8. Don't accept the apprentice rate if you're not actually an apprentice If your apprenticeship doesn't have a structured training element, you might be being underpaid.

To be classed as an 'apprentice', your contract must include some form of structured – and paid – training time. This training should have a clear timescale and aim (for example, specific skills you need to learn) and should also provide you with transferable skills you'll need to succeed in your future career.

If your job doesn't have this training element, you should legally be paid the minimum wage rate for your age rather than the apprentice wage – even if you're called an 'apprentice' by the company you work for.

What to do if you think you are (or were) being underpaid Step 1: Figure out if you’ve been underpaid If you think it’s likely you’ve been underpaid by a current (or previous) employer; there are a couple of checks you can do before making a complaint:

  • The Government has a national minimum wage and living wage calculator to help you check what you should be getting paid.

  • Call the ACAS helpline. ACAS can't provide legal advice but can give general advice and explain the risks and benefits of going forward with your complaint.

Step 2: Make a complaint. If you feel comfortable talking directly with your employer – perhaps you think it may have just made a mistake – you can raise the issue with them directly. If that's something that you're nervous about, or if you no longer work at the company, you can get it sorted anonymously by getting in touch with HMRC.

Ask HMRC to investigate Starting an investigation is usually as simple as submitting this online form, and you can remain anonymous throughout. Make sure you tick 'yes' when asked if you're willing to be contacted by HMRC, as HMRC told us it's tough for it to continue the investigation if you don't. If HMRC finds that your employer has not paid the correct minimum wage, it can:

  • Make your employer pay you back the amount they've underpaid you, going back SIX YEARS. Anyone else affected in your company will also be refunded. Better yet, any pay you're owed will be paid at CURRENT minimum wage rates.

  • Issue a fine against your employer for not paying you the right amount.

  • Take your employer to court if it refuses to pay.

The main downside of going through HMRC is the time it takes – particularly if you work for a big company. When you submit a complaint, HMRC will look into the salaries of EVERYONE who works at your company, as well as all potential causes of underpayment. So it can take a while (often many months), but if any issues are found, everyone affected will get a refund. Talk directly to your boss. If you'd rather not go down the formal investigation route, you may be able to resolve things informally by talking to your employer. Before heading into the conversation, consider what outcome you're looking for: do you just want your pay increased going forward, or do you want any past underpayments repaid too? Go into the discussion armed with information to support your case and a clear idea of the amount you think you're owed. This could be as simple as showing your employer the latest government guidance and your current payslips, or it may require more digging – particularly if you think you've been underpaid for years. If the issue isn’t resolved with an informal chat, you can submit a formal complaint (usually just by writing a letter laying out what’s wrong). If your boss doesn't reply, or you're not happy with the outcome, you can take your complaint to ACAS by filling out this form or calling 0300 123 1122. You even have the right to go to an employment tribunal (which can look at whether you’ve been treated unfairly, as well as if you've been underpaid). But, if your complaint is just about being underpaid, we’d probably suggest you submit a complaint to HMRC. Worried about how your boss will react? At any point during the process, you can call the ACAS helpline to talk through your options. It can't provide legal advice but can explain the risks and benefits of going forward with your complaint.

It can also provide support if you’re worried about the impact that complaining could have on your work life. For example, while you can remain anonymous during the HMRC investigation process, if you're working for a small business, there's no guarantee that your employer won't try to guess who's made the complaint. ACAS can provide guidance if you think you’re being treated unfairly as a result of your complaint.

If you're a trade union member, you can also get in touch with it for support. You may be able to bring a trade union representative with you to meetings with your boss if you'd like the extra support.

Information supplied by Money Saving Expert/martin Lewis


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