Paying Piece Work Rates? Beware of the NMW Requirements
If you pay your employees using piece work rates you need to be aware of a recent case against Midcounties Co-op, the UK’s largest independent co-operative which saw them having to pay out £14,000 to one newspaper delivery man and £4,000 to another after they repeatedly received less than the minimum wage for their rounds.
Rodney Sharpe, 64, was paid approximately £3.15 an hour for four years. He was awarded £14,000 – the highest single payout for a breach of minimum pay regulations. Roger Lilley, 66, also received more than £4,000 after complaining that he earned just 69p per hour on some days.
In 2014, Lilley complained to his employers that after deducting the £57 a week he spent on petrol, insurance and other expenses, he was earning the equivalent of 69p an hour between Monday and Friday for delivering 46 papers, equating to just over 18p per delivery. The 68kg of newspapers he carried made it impossible for him to complete his rounds by 7.30am without using his car. He claimed that the pay and conditions were more appropriate for children “doing short local paper rounds before school.”
An HMRC inquiry also ruled that Lilley was working seven days a week, which breached working time regulations. The chain is now asking previous employees to come forward if they suspect they have been underpaid.
Midcounties Co-op claimed the underpayment was due to its previous method of calculating payment by the round – which did not take account of how long employees actually took to make their deliveries. It said it had now changed this system.
If you pay your staff using piece rates, you need to make sure that these have been calculated fairly to ensure that employees do not earn less than the minimum wage for their age group. Adjustments also need to be made if you have staff with disabilities to ensure that they are not disadvantaged if they cannot work as fast as others.
If you need advice or assistance with ensuring you are paying your staff correctly, please get in touch.
Posted on 19 Nov 2016