Are you paying staff the correct amount for their overtime?

Professional services often have busy times during the year, be it a filing deadline or a change in legislation or regulations. The whole team is working hard and working extra hours (often unpaid overtime), but at times like these, do companies check that their staff pay is compliant with the national living and minimum wages?

Recently, there has been coverage in the news which directly refers to this issue of compliance.

For National Living and Minimum wages, the law focuses on the reference period i.e. the month or week the employee is paid in, and employers must be compliant for that reference period.

A 22 year old worker, who works 46 weeks of the year, 40 hours a week, would need to be paid £13,579 a year based on the national minimum wage. Our worker in this example is paid an £18,000 annual salary, paid in equal £1,500 instalments monthly. No problem… Or is there?

If in January, for example, they work 23 days and each day work 2 hours of unpaid overtime. This results in an underpayment of £197 and an employer in breach of the law.

Penalties can be levied by HMRC up to 200% of any arrears, capped at £20,000 per worker.

With busy periods of the year demanding our attention and changes in legislation to comply with, it can be easy to overlook other fundamental business matters.

If you need any advice or support with your business compliance issues, please contact one of our EQ Professions specialists via professions@eqaccountants.co.uk or call your local office contact.