The restaurant chain, Wagamama, is one of the latest group of businesses to be named and shamed for failing to pay the National Minimum Wage
Employers run the risk of being publicly shamed for breaches of the National Living Wage and National Minimum Wage provisions. Whereas you might expect it to be only small owner-managed businesses that are caught out, it is noteworthy how many large national or multinational companies find themselves in breach, often without realising they are flouting the law.
Wagamama is reported to have had to repay £133,212 to 2,630 workers, making it the company with the largest payment falling due amongst the latest batch of employers to be named and shamed.
Yet sometimes the negative publicity from being named and shamed can vastly outweigh the extra cost of paying staff their legal entitlements.
In this particular instance, the explanation given by Wagamama was that there had been “an inadvertent misunderstanding” on the rules governing payment for staff uniforms. It appears that they required staff to pay for their uniforms whereas in fact the uniforms should have been provided at the expense of the company. The deduction for the cost of the uniforms took the pay rates below the National Minimum Wage.
Unfortunately for Wagamama and other employers caught out by genuine misunderstandings of how to apply the laws governing wages, a misunderstanding is no defence to a failure to pay the National Minimum Wage. It is a well known principle in courts and tribunals that ignorance of the law is no defence. “We didn’t take legal advice” will not attract any sympathy from a tribunal.
On the face of it, you might think that laws relating to payment of the National Living Wage and National Minimum Wage are fairly basic. You just have to pay your employees a set rate and not pay them any less per hour. But what counts towards a wage? What deductions can you lawfully make? What is classed as a uniform? What if you offer accommodation to your employees? Can you charge them for this and deduct it from their pay? The rules governing wages are not always so straight forward and this is why it is so easy for unwary businesses to flout the rules without realising.