Company found apparent 'loophole' in National Living Wage increase. Advice Please!!

[Emf1986]

Hi all,
In just looking for advice regarding what's legal with the NLW increase. My partner is 40 and was previously workin at the minimum wage level of £6.70 which increased to £10.05 (time and a half) for any overtime worked after his contracted 40 hours.
Although his wage has now increased to £7.20 in keeping with the national guidelines the company have stated that they won't be paying the overtime rate based on the new hourly rate and will be calculating the 'time and a half' based at a lower rate!!
Although I am no expert, I would assume that surely this is illegal rather than a genuine loophole and I would assume it's a case of his company trying it on. Could anyone offer advice please??!! And also advise a course of action??

[Kati]

Re: Company found apparent 'loophole' in National Living Wage increase. Advice Please

[MENTION=26290]mariefab[/MENTION] :bump: xx

[Ripped-Off]

Re: Company found apparent 'loophole' in National Living Wage increase. Advice Please

Does you partner's contract specifically state that overtime will be paid at time + 1/2 over a set number of working hours?

[Openlaw15]

Re: Company found apparent 'loophole' in National Living Wage increase. Advice Please

Hi all,
In just looking for advice regarding what's legal with the NLW increase. My partner is 40 and was previously workin at the minimum wage level of £6.70 which increased to £10.05 (time and a half) for any overtime worked after his contracted 40 hours.
Although his wage has now increased to £7.20 in keeping with the national guidelines the company have stated that they won't be paying the overtime rate based on the new hourly rate and will be calculating the 'time and a half' based at a lower rate!!
Although I am no expert, I would assume that surely this is illegal rather than a genuine loophole and I would assume it's a case of his company trying it on. Could anyone offer advice please??!! And also advise a course of action??

When the NMW increased from 6.70 to 7.20 per hour it either has become a variation of a existing contract, ie by adding a new term 'NWM at 7.20' or a new contract all together. The law is that the employer has to pay the NMW per hour, so the employer is well within his rights to pay the over-time at 10.20 an hour as long as the 7.20 minimum amount is being paid. Has you contract been amended either verbally or in writing? How long was your previous contract for?

[Ripped-Off]

Re: Company found apparent 'loophole' in National Living Wage increase. Advice Please

The reason for my question was that overtime can be either voluntary or compulsory and is any work performed outside the contracted hours of employment. Compulsory overtime will be written into the contract, though an employer cannot force workers to work longer than 48 hours/wk on average if they have not otherwise given their consent in writing. WTR 1998 (as amended).

There is no legal entitlement to be paid for overtime, unless the contract of employment states otherwise, regardless of whether you earn the NMW or any other amount. Furthermore, since statute law normally overrides contract law, and because the living wage was introduced by statute; The National Minimum Wage (Amendment) Regulations 2016, the amendment to the contract of employment is varied by statute. I am not an employment expert, but I do not think a new contract has been formed.

Therefore, unless the contract specifically states that overtime is to be paid at time + 1/2 (or whatever) then the employer does not have to pay overtime. That said, there may be an argument that if the contract of employment is silent on overtime, and a convention has been established to pay overtime, then it may be difficult for the employer to resile from that convention to the detriment of the employees, unless of course a new contract is issued which specifically deals with overtime, though there may be case law to the contrary.

It may also depend on what industry your partner works in. For example, the construction industry has the Construction Industry Joint Council (CIJC) Working Rule Agreement where pay and conditions are set at a national level and the worker's contracts should be written to reflect these agreements if the employer has 'signed' up to them.

[Openlaw15]

Re: Company found apparent 'loophole' in National Living Wage increase. Advice Please

The reason for my question was that overtime can be either voluntary or compulsory and is any work performed outside the contracted hours of employment. Compulsory overtime will be written into the contract, though an employer cannot force workers to work longer than 48 hours/wk on average if they have not otherwise given their consent in writing. WTR 1998 (as amended).

"There is no legal entitlement to be paid for overtime, unless the contract of employment states otherwise, regardless of whether you earn the NMW or any other amount. Furthermore, since statute law normally overrides contract law, and because the living wage was introduced by statute; The National Minimum Wage (Amendment) Regulations 2016, the amendment to the contract of employment is varied by statute. I am not an employment expert, but I do not think a new contract has been formed."

Therefore, unless the contract specifically states that overtime is to be paid at time + 1/2 (or whatever) then the employer does not have to pay overtime. That said, there may be an argument that if the contract of employment is silent on overtime, and a convention has been established to pay overtime, then it may be difficult for the employer to resile from that convention to the detriment of the employees, unless of course a new contract is issued which specifically deals with overtime, though there may be case law to the contrary.

It may also depend on what industry your partner works in. For example, the construction industry has the Construction Industry Joint Council (CIJC) Working Rule Agreement where pay and conditions are set at a national level and the worker's contracts should be written to reflect these agreements if the employer has 'signed' up to them.

Contract law is mainly based on common law, ie case principles but not statute. The NMW Act/s do not vary the contract between the employer and employer and this is the privilege of contract, but Parliament has decided to amend a statute part, rather than rely on a (weaker) statutory instrument, which deals with the Minimum wage and nothing else. However, it seems likely that the construction industry board pertains to tradesman and in general they would be paid usually far more than the NMW.

[Ripped-Off]

Re: Company found apparent 'loophole' in National Living Wage increase. Advice Please

Contract law is mainly based on common law, ie case principles but not statute. The NMW Act/s do not vary the contract between the employer and employer and this is the privilege of contract, but Parliament has decided to amend a statute part, rather than rely on a (weaker) statutory instrument, which deals with the Minimum wage and nothing else. However, it seems likely that the construction industry board pertains to tradesman and in general they would be paid usually far more than the NMW.

You may have misunderstood me. Most statutes cannot be excluded or limited by a term in a contract; for example you cannot exclude Building Regulations (covered by the Building Act) or National Minimum Wage Regs (covered by the Minimum Wage Act) or contractual or common law liability for death or injury (Unfair Contract Terms Act 1977). This is what I meant by 'statute law normally overrides contract law'.

The SI I referred to is an amendment to the National Minimum Wage Act. Putting semantics to one side, I think it is obvious that the Regs would be implied into the contract, and each amendment to them via the parent Act. Don't take my word for it;

'Thus the Equality Act 2010 imports an equality clause into contracts of employment, minimum wages for appropriately qualified persons are guaranteed by the National Minimum Wage Act 1998 and various employment rights are contained in the Employment Rights Act 1996 and various regulations, etc.'

SELWYN’S LAW OF EMPLOYMENT 17th Ed p102

[Openlaw15]

Re: Company found apparent 'loophole' in National Living Wage increase. Advice Please

You may have misunderstood me. Most statutes cannot be excluded or limited by a term in a contract; for example you cannot exclude Building Regulations (covered by the Building Act) or National Minimum Wage Regs (covered by the Minimum Wage Act) or contractual or common law liability for death or injury (Unfair Contract Terms Act 1977). This is what I meant by 'statute law normally overrides contract law'.

The SI I referred to is an amendment to the National Minimum Wage Act. Putting semantics to one side, I think it is obvious that the Regs would be implied into the contract, and each amendment to them via the parent Act. Don't take my word for it;

'Thus the Equality Act 2010 imports an equality clause into contracts of employment, minimum wages for appropriately qualified persons are guaranteed by the National Minimum Wage Act 1998 and various employment rights are contained in the Employment Rights Act 1996 and various regulations, etc.'

SELWYN’S LAW OF EMPLOYMENT 17th Ed p102

The Minimum wage law is just that - deals with the minimum wage, any other terms of employment are subject to the employer/ employer relationship. The state will not interfere in the contract usually as it's freedom in a democratic country but the state (the courts) may imply terms in certain situations where the contract is silent on the relevant terms. The employer does not have to pay any employee a time and a half overtime pay rate but was doing so under the previous Minimum wage law. Now the time and half wage under the new minimum wage law will be more expensive for the company and it (the company) s not obliged to pay it under NMW law or contract law, so naturally it will not.