The horrors of not paying the minimum wage

It’s not exactly a large problem, is it?

There are over 100 employers on the latest list, Nick Boles the Business Minister has announced, owing over £389,000 to staff who have been underpaid.

£400k in respect of the what, £1.2 trillion or so of household income is, to all intents and purposes, zero, isn’t it?

Monsoon Accessorize Ltd, London W11, neglected to pay £104,507.83 to 1438 workers

That’s £72 per worker. If they were all full time for a year (obviously not) it’s 4 pence an hour.

What in buggery were they doing? Just miscalculated? Not paying for a 10 minute tea break or summat?

48 thoughts on “The horrors of not paying the minimum wage”

  1. It will have cost the taxpayer far more than 400 grand to find and sic lawyers on these employers. Far more.

  2. And apparently none of the employees complained, It was only HMRC that twigged that they were in breach of the law as it stands.

  3. Yep, it did strike me as being an odd story. Monsoon had decided that staff would buy the clothes at a discount but were then expected to wear them to work. That justifies the deduction, for sure, but I’m not sure on the next point: would tax and NI come out of the pay packet before the clothing deduction?

    Either way, clearly staff weren’t going to complain as they got discount clothes that they could wear outside work as well as inside, and one assumes that lots of the people who work in clothes shops are keen on looking fashionable. Monsoon probably saved some money somewhere, and at any rate presumably got a happier workforce. It’s not even clear that the taxman lost out, unless Monsoon wangled it so that the clothes were allowed as an expense of work. Perhaps that’s where the scheme fell down.

  4. Philip Walker: “..and one assumes that lots of the people who work in clothes shops are keen on looking fashionable. “

    Depends which end of the market you are talking about… 😉

  5. @Philip Walker
    The Monsoon case looks like yet another story that the MSM didn’t cover properly. Where can I find the detail you gave: about the workers not complaining etc?

  6. I don’t think the media are particularly mis-reporting the facts, although I can believe that the Guardian is already vigorously mis-interpreting them. I was taking the same line as DB, above; in my case inferring from the BBC, when it reported, “Monsoon Accessorize’s wages dipped below the minimum because it had a policy of offering staff discounted fashions to wear at work. The cost was taken off their wages, taking them below the legal threshold. The company says the issue came to light when the tax authorities reviewed its payroll system, it took prompt action to end it and that basic wages have been raised to prevent any repeat.” (src)

  7. Bart

    Clever you!! You’ve really picked up on something there. Now, could you give us your source to show the staff definitely DID complain.

    You see,
    i) I think Philip Walker’s inference is very reasonable.
    ii) Your pedantry seems to have achieved nothing at all.

    Again, clever clever you!!

  8. I think the Daily Telegraph can reasonably be castigated for not giving the slightest hint that in its report that the case was about the correct accounting procedures for employee benefits in kind.

    Here is something that strikes me as relevant, but I don’t suppose we will ever know: The scheme was compulsory, but were there minimum and maximum bounds? For example, could an employee who didn’t much like the scheme buy just one outfit and wear it every day for years? Could somebody else who loved fashion use all her spare income to buy dozens of outfits?

  9. It wasn’t all that long ago that The Tel was a decent paper. The Guardian never has been, in my memory, although oddly The Observer was.

  10. It’s hardly a surprise to see Monsoon involved in something like this – they’re famously cuntish to work for.

    As for their fiddle, it was, given their track record, probably deliberate. Essentially they were making employees buy their own ‘uniforms’, and the deductions for that took them below minimum wage.

    Complaints may or may not have come from employees – it’s quite possible most didn’t notice they weren’t getting minimum wage, or believed their employer when told the deductions were legal.

  11. This is a very important story. How can government micromanage the economy if private businesses just ignore their fascist directives? Even trivial transgressions must be crushed for the greater good.

  12. @Dave
    I can’t comment on Monsoon’s reputation. I’d never heard of the company before today. But your post does raise a pretty important aspect.
    How did Monsoon’s policy on staff clothing compare to that of all the other retailers of luxury goods (including perfumes and handbags and such like), who also, I think, insist that their sales staff be well-dressed? Was Monsoon’s staff clothing scheme different to all the others? Or was Monsoon the same as many others, and just unlucky to be the one that was ‘named and shamed’?
    This seems to be a line of thought way too deep for the MSM.

  13. “Dave

    As for [Monsoon’s] fiddle, it was, given their track record, probably deliberate.”

    Was it a fiddle?

    If (say) they paid their staff £100 and the staff then bought £10 worth of discounted clothing that might have meant NMW was met but they instead seem to have paid their staff £90 after clothing was chosen and this fell below NMW.

    Not sure if that was exactly what happened but if so it’s a bit of a technicality.

    Making people who work in a clothing store wear that store’s brand doesn’t seem unreasonable. At least they’d be able to wear the clothing outside work. I’m expected to wear a suit to work, don’t get paid to buy it and except for the occasional wedding or funeral it’s the only time I do wear it.

  14. Bart>

    It’s a combination of things. Primarily, it’s that Monsoon is not like those others and it pays min wage where they pay pretty well. Also, the high-end places have stuff that costs too much to expect workers to pay, whereas Monsoon has cheap crap in comparison. They’re not a luxury retailer at all, they’re somewhere in the Primarni ballpark.

    Andrew>

    http://www.hmrc.gov.uk/manuals/nmwmanual/NMWM11220.htm

    “I’m expected to wear a suit to work, don’t get paid to buy it and except for the occasional wedding or funeral it’s the only time I do wear it.”

    Are you on minimum wage? If you are, then you’re entitled to be paid a little extra. I assume not, though.

  15. Hello Dave

    So that entisemitic in the article you trumpeted the other day. Have you found it yet or are you finally prepared to admit you made it up?

  16. So Dave now claims (evidence completely unnecessary) that Monsoon is “cuntish” to work for and is engaged in a “fiddle”. I mean, everyone knows that don’t they! Bart picks up on this “very important aspect” and asks a whole.load more question about retailers in general that “the MSN” hasn’t picked up on.

    Who the hell says ‘the MSN’ should be picking up on this, just because you’ve made up random questions.

  17. FFS Places like Monsoon attract a lot of young women who rather like staff discounts. I worked in a record shop as a kid and probably spent about half my wages on discounted records.

    The MSM ALWAYS loves a big target. They’ll always find something small wrong at Starbucks, McDonalds or whatever, while the worst abuse of staff takes place in small shops.

  18. My wife has worked in high street retail since not long after becoming a mother. She loves the hours (part-time), and working in town. I keep my opinion to myself.

    All these places insist on x level of clothing and offer big discounts. Wages for all levels are gradually levelling at the NMW. Herself believes this to be absolutely the best part of the job (the cheap clothes, not the NMW). I keep my opinion to myself.

    There’s worse anyway, paying people NMW to work in a decent shop in a customer-facing position in a High Street in the South East, parking not included, strikes me as mental. However, the margins are rubbish these days, and clearly the positions can be filled. So I’m wrong.

    Dave, I dare you to get between my wife and her discount card. (I might even pay you).

  19. @Andrew M
    Two things:

    It’s not a matter of tax deduction; it’s a matter of definition of ‘wage’ for the purposes of minimum wage law
    In this case, there is maybe also the matter of the definition of ‘uniform’ as opposed to ‘ordinary clothes’.

  20. @Jack C
    D’you mean that your wife gets a salary and also a card allowing her to buy stuff at a discount as separate transactions?
    If that is so, then it sounds as though the balance of salary less cost of stuff bought at a discount can – at least in theory – come to a figure less than the minimum wage or even zero or even negative?

  21. I worked in a record shop as a kid and probably spent about half my wages on discounted records.

    Nowadays the SWJs would insist the record shop pays you enough to support a family of four in London’s Zone 2.

  22. “there is maybe also the matter of the definition of ‘uniform’ as opposed to ‘ordinary clothes’.”

    No there isn’t. Case Law over taxation of clothing and distinctions between uniform and ordinary clothing were settled a long time ago. And nobody, absolutely nobody is suggesting Monsoon’s staff were wearing a uniform.

  23. Bart,
    Not sure exactly what the current rule at the current place is (she moved from one bit of carpet to another in the same department store, but changed employers).

    Prior to that, and I guess it’s the same:

    – She gets a salary (or “salary”), which the NMW is gradually catching-up with
    – The staff had/have to wear the store’s clothes, for which there was a heavily discounted allowance (75% off? something like that). The amount you could buy was limited by the hours you worked.

    I thought this was a cheek myself, however Herself only ever complained about the limit. Of course, clothes have to be bought for work anyway, so my objection was probably invalid (not that I brought it up again).

    In addition, employee’s have a store card with variable but pretty big discounts. Our views on this were again at variance.

  24. @Jack C
    Thanks. Sounds like the same system as at the named and shamed Monsoon then.
    Not that I particularly want to express a view on that case as yet. I’m just interested to find out what seem pertinent details.

  25. TN:

    “Nowadays the SWJs would insist the record shop pays you enough to support a family of four in London’s Zone 2.”

    And then express outrage over the cost of records even though the vinyl only cost 14p.

  26. “Example 3: A hairdresser requires workers to wear a uniform consisting of any black trousers and any white tee shirt. Workers can purchase these from any shop. The cost of purchasing these items will reduce national minimum wage pay, since it is a specific requirement imposed on the worker by the employer.”

    An oddity here. You could spend £5 on a white tee shirt or £200.

    And how long is the tee shirt supposed to last? Do you divide the cost by the longevity?

    I guess the same considerations applied in the Monsoon case.

  27. Bart,
    Well, I’d like to be outraged myself, as a part-time Puritan, but can’t find a proper reason.

    Unless a uniform is provided, you have to buy clothes for work. In clothing retail you may have to buy from where you work, but that’s balanced by the big discount.

    There’s no exploitation going on; my wife is not the only woman in the country who likes buying clothes, and nor is she the only one who likes a discount.

    Most of the staff are either students or women earning some extra or just getting out of the house. An increase or decrease of 10% would make almost no difference to most of them (it certainly wouldn’t to my wife).

    Meanwhile, there’s a much bigger issue raised by whether you classify your staff as 40 or 37.5 hours a week (which means the same amount of work generally).

  28. Meanwhile, the youngest finishes A Levels in the summer.

    Will the Mrs go back to teaching? Do I even dare bring it up?

  29. When my wife gave up a good paying job to train as a nurse she took a part time Tesco job partly for the staff discount. Made a difference in scrapping by with one vastly reduced income for 3 years.

  30. “Named and shamed Monsoon”

    How shamed exactly? Only in the fevered minds of SJWs desparate for the next evil vilain to pursue.

  31. Having gone through a few NMW enquiries with HMRC, I strongly suspect that most if not all of the employers to “neglected to pay £X to Y workers” in fact simply have a different opinion about how the NMW rules work from HMRC’s.

    In many cases they will actually be wrong, but in several cases I’ve seen HMRC’s views are unreasonable – their definition of “salaried worker”, for example, is virtually impossible to meet in practice.

    So I suspect that this list this boils down to 1) employers who got a technicality of the rules wrong, and 2) employers who can’t be bothered to argue with HMRC about a trivial sum and would rather pay the danegeld.

  32. My professional opinion is that unless you are paying everyone £15k a year with no deductions for anything, HMRC could almost certainly find something wrong with your NMW position. I’d still be a bit nervous unless the minimum salary is well above that.

  33. @Pellinor
    I get the impression that most of the cases caught by the authorities are not straightforward ones (‘You paid workers less than the minimum wage per hour) but the more tricky ones (‘You did pay workers the minimum wage per hour or more, but after taking account of certain other factors eg discounted clothing, you are deemed to have broken the minimum wage law’)
    Is that so?

  34. That seems to be the case based on my experience (of a handful of cases) and the various reactions that make it to the press.

    I would expect that only those people who feel they got a raw deal would actually make statements, so there’s some selection bias there; but then again, as Tim says the amounts per employee are typically very low. If you were deliberately underpaying someone, you wouldn’t bother for a couple of hundred quid over a few years.

    There are normally a few offenders with a few grand per employee, which could suggest they were being a bit mean. On the other hand, half an hour’s unpaid overtime (or clearing-up after your shift, or locking up the building, or whatever) a day for a year adds up to £750-odd quid.

    Strictly speaking, if your employer gives you an hour for lunch but wants you to be a bit flexible about it just in case you’re needed to do that thing with the till that only you seem to be able to get to work, and therefore asks you not to leave the premises so you happily sit in the staff room reading over lunch, then HMRC could get you an extra £1,500 a year even if neither you nor the employer are at all unhappy with the arrangement or realise it’s wrong. Plus a £750 fine and the shaming of the “neglectful” employer.

  35. Simpler example: you have a seasonal business, where it gets a bit busy at some times of year. So you get staff to do overtime at say Christmas, and give them time off in lieu in January. It all comes out in the wash, and taking the period as a whole no-one does more hours than they’re supposed to and everyone gets NMW for the hours they’ve worked..

    You have almost certainly underpaid your staff for NMW purposes (according to HMRC guidance, anyway), and should be named, shamed, and fined.

    Oh, and incidentally you are obliged to pay your staff more than it says in their contract, even though they do exactly the amount of work specified in that same contract….

  36. Could it be that the cases that get prosecuted and reach the media are quite unrepresentative? They are ordinary companies with reasonably tidy accounting that can be examined.
    On the other hand, there are perhaps unscrupulous employers of immigrant labour paying less than the minimum wage, who do everything in cash and don’t keep records on computers that can be impounded. Since it is more like hard work to prove a case against them, they are at the bottom of the list for investigation. Or is that too cynical?

  37. I don’t really know why the cases that get named in the crusade against unscrupulous employers of immigrant almost-slaves all seem to be people who make minor mistakes in their compliance with an arcane and counter-intuitive regime for determining effective pay rates.

    It could be that the big cases are very big and are taking a while to go through the system (which is only a couple of years old). Or it could be that the unscrupulous have no scruples in disappearing when HMRC turn up, leaving the inspector unable to find an address to send the underpayment notices to. Or it could perhaps be that the unscrupulous lie to HMRC, and so appear to be all OK. Or maybe HMRC don’t have the resources for the difficult cases, and so stick with the easy ones to get the numbers up. All sorts of possibilities 🙂

  38. It’s not a prosecution, but the way. It’s just like a PAYE inspection, except that the rules are simple and counter-intuitive, rather than complex and counter-intuitive.

    HMRC asks for information, employer sends it in, HMRC points out why you’ve done it wrong, employer says “those rules can’t be right! Look at the legislation!”, HMRC says “Legislation? I’m looking at our manual. Cough up”, employer says “sod it, it’s not worth arguing about” and coughs up.

    The only real differences are the penalty regime and the naming and shaming. Oh, and the rules are more arbitrary and harsh, because there’s no case law yet to pull HMRC back to a more realistic position.

  39. So, we find yet another interesting aspect to this case.

    One might expect that the model was: 1, Parliament makes a law; 2, if you break the law you are punished.

    But no, here the model seems to be: 1, Parliament makes a law; 2, HMRC converts the law into a manual (which may well entail making interpretations that not every rational person would agree with, and which are not confirmed by any democratic body); 3, if you break the rules in the manual you are punished UNLESS you incur the complications of a court case and persuade the judge to agree that the interpretation of the law in HMRC’s manual is wrong and your interpretation is right.


  40. Jack C

    October 23, 2015 at 5:05 pm

    Meanwhile, the youngest finishes A Levels in the summer.

    Will the Mrs go back to teaching? Do I even dare bring it up?”

    Risk it. There are plenty of part time teaching jobs if she doesn’t want to work full time for whatever reason, and the pension is good if she can get her years of service up.

    A good pension can buy many clothes, well into retirement.

  41. Bart’s comment at 10.06 is typical of the dirty little SJW way he has conducted himself through his thread:
    “So, we find yet another interesting aspect to this case”
    No we don’t. Because his original attempt to find an “interesting aspect” was to ponder (without any previous suggestion anywhere) whether Monsoon was a particularly bad employer or one comparable with other evil retail capitalists. Once shown that these are very muddy technical waters he flips and is now adopting an enquiring, objective and impartial tone.
    I would urge anyone joining this thread at this point to revisit the start and take a look at his interactions with Dave.

  42. Bart, in the civil service the manual is used, not the law.
    Manuals get changed over time, usually minor changes and clarification.

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