Rota cost & wage checker

The commonest minimum wage breach is unpaid time, not a low rate

Minimum wage is not a rate somebody is offered. It is pay divided by time worked, checked across a pay reference period. That single fact is why almost every breach looks nothing like an employer paying too little.

Here is what it usually looks like instead:

• A fifteen minute handover before the shift starts
• A security check on the way out
• Clock-in times rounded down to the quarter hour
• Travel between clients that is not counted
• A deduction for a uniform or for tools

Take somebody on £12.71 an hour, the exact minimum, working an eight hour shift and required to be there fifteen minutes early. They are paid £101.68 for the shift and they have worked 8.25 hours. That is £12.32 an hour: thirty nine pence under the minimum, every shift.

Their rate never changed. Their payslip is arithmetically correct. The rota says eight hours because the shift is eight hours. The time either side is the part nobody wrote down, and across a year it comes to over eight hundred pounds of arrears per person on that arrangement.

This is what HMRC names employers for, and the reason it catches decent employers is that nothing in the paperwork looks wrong.

Two different problems with two different fixes

The tool separates them, because they are not the same thing. Somebody under the minimum on their rate needs a pay rise. Somebody under it because of unpaid time needs the rota changing or the time paying, and putting their rate up is an expensive way of not fixing it.

The birthday nobody is warned about

A worker turning 21 moves from £10.85 to £12.71. That is a 17% rise falling due on one particular day.

Nothing in a payroll run announces it. There is no prompt, no flag and no letter. The rate that was lawful yesterday is unlawful this morning, and the employer usually finds out when somebody complains or when HMRC arrives.

There is a smaller jump at 18, from £8.00 to £10.85. The tool flags both, and it distinguishes between a rate that will survive the birthday and one that will not.

The real cost of an hour

A rota priced on wages is priced short. Two things sit on top of every hour and neither is optional:

• Employer National Insurance, 15% of pay above the secondary threshold
• Auto enrolment pension, a 3% employer minimum on qualifying earnings

On a full time worker at £12.71 that pushes the real cost of an hour comfortably past £14. Over a twelve person rota the gap between the wage bill and the actual bill is the size of another employee.

The Employment Allowance takes up to £10,500 off the annual National Insurance bill where the employer qualifies, so the tool applies it to the yearly figure rather than smearing it across the weekly one. Spreading it would make every worker look cheaper than they are. It is not available to everybody: a company with a single director and no other employees cannot claim it.

Deductions count, and so does what you require people to buy

Deductions for a uniform, for tools, or to cover a till shortage come off the minimum wage calculation. So a worker on exactly the minimum whose employer deducts five pounds a week for a shirt is being underpaid.

The same applies where there is no deduction at all but the worker is required to buy something in connection with the job. Money spent because the employer requires it reduces pay for minimum wage purposes whether it goes through the payroll or not.

How far back it goes

HMRC can go back six years and add a penalty of up to twice the underpayment on top of the arrears.

And arrears are repaid at the current rate rather than the rate that applied at the time. So a shortfall from four years ago is repaid at today's £12.71, which means a historic breach costs more to put right than it ever saved.

It prices the rota, not the payroll

It prices a rota and flags what it can see from the hours and rates you give it. It does not work out PAYE, employee National Insurance, holiday pay accrual, salary sacrifice, or the accommodation offset, and it does not decide whether somebody is a worker or genuinely self employed, which is a question that changes every other answer on the page.

For whether the pattern itself is lawful there is the shift pattern generator, and the irregular hours accrual tool handles the 12.07% for casual staff.