If you were to look back at every naming and shaming publication from HMRC you would notice that “unpaid working time” is listed as a common reason for a National Minimum Wage (NMW) underpayment. Therefore, understanding what ‘working time’ means is vital to make sure you don’t fall foul of the rules.

Definitions

Ideally, we would like to present a clear and concise definition at this point. Unfortunately, under NMW rules, the definition of ‘working time’ depends on which of the four categories of worker you engage (i.e. salaried, time, output or unmeasured).

If we take the simplest of the four definitions, that of a time worker, working time for such employees under the NMW rules can be summarised as:

“hours when a worker is available, and required to be available, at or near a place of work”

But there are additional considerations for:

• Workers that are permitted to sleep during their shift
• Training – which has a separate definition for what time counts;
• Travel - which also has a specific definition to establish whether this time counts as working time.

Where do employers fall foul of the rules in this area?

To help an employer navigate the complexity of working time, it is easiest to consider typical examples of where employers have fallen foul of the rules. Leaving aside travel time, which is another complexity, the other top five reasons why unpaid working time issues arise are:

• Arriving before/leaving after shift time – HMRC will typically look to scrutinise any time the worker is at work and is not paid, particularly where the employer doesn’t have records to demonstrate this is unrelated to working time (such as the worker turns up early to catchup with colleagues, or due to public transport times and is not working during this time). Problems have arisen on cases where a worker has to undertake pre-work tasks such as changing into uniform, loading up computers, even the time to enter the building and place their belongings in a staff common room before the required start time.
   
• Worker is asked to come in early or stay late – Problems have arisen in cases where managers have asked staff to come in early or stay late for team meetings, or to come in early to allow a shift handover meeting. The more extreme examples I have seen for staying late, range from correcting a till misbalance to undertaking security checks.
   
• Control processes in place which override clock in systems – Many employers will have an override process to allow for a worker forgetting to clock in/out. Unless there is a clear audit trail, such as workers signing to confirm the override time sheet is correct, then we are seeing cases where HMRC are challenging that worker have accrued unpaid working time. Other issues have arisen due to rounding in the payroll system to account for arriving early/lateness, i.e. individuals are paid to the nearest 15 minutes, or due to the location of the clock in machine being the other side of the factory floor.
   
• Break time - Where workers don’t clock in/out for breaks, HMRC will typically look to challenge that, without evidence the break was taken, an element of that time is working time. It is worth bearing in mind that for time workers, you cannot include any pay a worker may receive for breaks for NMW purposes. Where this happens, we’ve seen HMRC argue that you can’t include the pay for the break, but you also can’t assume they took the whole break and, therefore they have pursued unpaid working time based on worker accounts in interviews.
   
• Time of in lieu (“TOIL”) – In a recent stakeholder meeting I attended with HMRC, they reminded us of their view that the concept of TOIL does not exist for NMW purposes. Ignoring salaried workers, this is arguable in our view. So long, as any additional time a worker has worked during pay period 1 is taken off in lieu by the end of pay period 2, then no NMW breach should arise solely due to TOIL. However, where TOIL is allowed, it is vital that employers put in place (and use) a robust control process and audit trail to ensure and prove compliance with NMW.

Protecting your organisation

In the majority of the cases that we come across in this area, the underpayment arises not due to deliberate intent, but because the employer was unaware the worker was working for this time. Often, we find supervisors, team leaders etc will take their own initiative to try and instigate change with the right intentions, but unaware that their well-intended actions have unfortunate consequences for NMW purposes.

Communication and education activities with a range of stakeholders within the business and a strong policy suite with robust controls and processes are ever increasingly important to ensure compliance with NMW.

If you have any questions regarding your NMW position and require assistance, please do not hesitate to get in touch with Kyle Newton, or your local expert:

Scotland – Mike Hepburn

Yorkshire, North East, North West & Midlands - Kyle Newton

Bristol, Reading & Southampton – Caroline Jones

East of England, South East & London – John Weston