Recently retailers' employment of minimum-wage workers has been an area of particular focus for the department with Wyevale Garden Centres one of many to find themselves under review.
The focus has brought into sharp focus retailers' need to be armed to deal with the changing rules around minimum-wage workers, who may make up large proportions of their workforce.
In May, John Lewis Partnership said it was in talks with HMRC after it emerged that it had been technically underpaying staff due to pay averaging. JLP announced that £36m has been set aside to cover potential back wage payments for the past six years.
The Government commissioned the Taylor Review of employment practices, published in July. It highlights the gig economy, advises the Government on ways to protect low-paid workers and recommends a right to request set hours. But the review describes the UK’s flexible labour market as one of the economy’s biggest strengths. It suggests that a blanket ban on zero-hours would create more "cliff edges" for employers and workers.
The Government's NLW was introduced on 1 April 2016 for all working people aged 25 and over, and is set at £7.50 per hour. The current National Minimum Wage (NMW) for those under the age of 25 still applies. Differences in pay for ages and paying overtime and sick/holiday pay are all potential issues for companies that employ minimum-wage and flexible-working staff.
A spokesperson says: "HMRC enforces the NMW and NLW in line with the law and policy set out by the Department for Business, Energy & Industrial Strategy. The Government are determined that everyone who is entitled to the NMW receives it.
"We can’t provide specific advice on issues affecting garden retailers and the payment of NMW. However, common errors made by employers in paying NMW to workers can include:
- Not paying workers the correct NMW rate for their age'
- Not paying workers for all working time — including time spent training, travel time (in certain circumstances) and when workers are required to be available at or near a place of work for the purposes of working.
- Not keeping sufficient payroll and working time records to show they are paying workers at least NMW.
"All businesses, irrespective of size or business sector, are responsible for paying the correct minimum wage to their staff. HMRC takes action to ensure that workers receive what they are legally entitled to."
Garden Centre Association chief executive Iain Wylie says garden centres need flexibility. He points out that there will be people who want full-time contracts and those who want to work part-time. The "right balance" is important for seasonal industries such as garden retail, with a mix of full- and part-time that can be "flexed" to cope with busy times. Some purely seasonal staff are essential too, he notes, but most important is understanding employment contracts.
Wyevale Garden Centres has begun a key time working/right people, right place, right time initiative to help deal with peaks and troughs in trading. This shows an example of how a big employer in the sector is coping with minimum wage increases — the company has 90 per cent of garden centre staff on contractual base hours and wants to better manage seasonal variation in weekly sales and weather conditions.
Recommendations include a reduction in the number of 39-hour contracts, an increase in the number of 20-hour contracts and flexibility around working days/hours according to seasons.
Garden centre wages for the second half of 2017 are being reduced by £1.2m compared with budget. This is £1.3m more than Wyevale spent last year and shows a reduction in planned increase in investment.
Wyevale spent £34.4m in the first half of 2017 compared with £31.5m in the first half of 2016, an increase of £2.9m, so the forecast spend for 2017 is still £4.2m (six per cent) higher than 2016.
Hayloft Plants' Derek Jarman said: "Rising costs are a big concern all due either directly or indirectly to the fall in the value of sterling.
"Our margin is under pressure so it looks like very little increase in staff wages at the end of the year – I will probably postpone any increase until 1 April 2018 when the new National Living Wage (NLW – 25 year and upwards) & National Minimum Wages (NMW – under 25 years) rates become effective.
"Last April NLW was increased from £7.20 to £7.50 (+4.2%). If the Government is going to hit their target of £9.00 per hour by 2020, it’s meant to go to £8.05 per hour (+7.3%). I could see it going as high as £7.95 (+6%). There is no way in the world that we can fund another large increase for all staff, so wage differentials will fall again. The way things are going everyone will be paid the statutory Living wage irrespective of what they do."
There are around 2,000 open cases which HMRC is investigating. Eligible employers will be named after their cases have been closed. The Government published a list of 233 businesses that underpaid workers on 16 August.
Official advice is here.