Employment Review: June 2015 – Employment Legislation

The key provisions under the SBEEA 2015 include section 152 which substantially increases the penalty that can be imposed on an employer that underpays its workers in breach of the National Minimum Wage legislation and section 153 which prohibits the use of exclusivity clauses in zero-hours contracts.

In essence, section 153 effectively prohibits any clause which seeks to prevent a worker from working for others while at the same time not guaranteeing that worker any particular hours.  Further regulations dealing with the anti avoidance and enforcement aspects are awaited and will give workers protection where they do suffer a detriment on the grounds that they have worked elsewhere.

Further section 152 now means that the previous maximum penalty of £20,000 per notice of underpayment, irrespective of the number of employees who have been underpaid by the employer, is now calculated on a per worker basis.  Therefore an employer may well be ordered to pay a maximum of £20,000 for each and every worker it has failed to pay National Minimum Wage.  On a related point, it is notable that the government has indicated its support for real terms increases in the National Minimum Wage, rising from its current level of £6.50 per hour to reach £8 per hour by the end of the decade.

Comment

Employers should now review their existing zero-hours contracts and ensure there are no exclusivity clauses preventing the worker from working for another employer.  In addition employers should consider the significant impact of underpaying its workers and ensure compliance with National Minimum Wage legislation.  The risk of increased penalties comes on top of the Government’s practice of naming and shaming employers who fail to pay the National Minimum Wage.

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