The claimant worked as a receptionist and porter. He was contractually required to work a certain number of basic hours per month and was further entitled to receive pay enhancements for working unsocial hours.

The respondent failed to increase the claimant’s hourly rate of pay as it was required to do once he turned 21 as per the National Minimum Wage Regulations 2015. The respondent argued that after totalling all the actual hours worked, the average hourly rate exceeded £7.20. They also argued that any payments for unsocial hours were ‘discretionary,’ and amounted to a ‘bonus’ payment that could not be considered part of the contract of employment.

Issues arose when the respondent decided to ‘simplify’ the information provided to employees and the wage slips did not differentiate net basic pay and net pay for unsocial hours. The tribunal concluded that the new format of payslips ‘masks’ the fact that the wrong calculation had been used.

The tribunal noted there was a ‘compelling inference’ that the employer’s method of calculation was ‘deliberately designed to short-change the claimant’. It held that the employer made unlawful deductions from the claimant’s wages and ordered that he be compensated for the shortfall.

This decision is significant for a very simple reason. The tribunal emphasised that combining contractually based payment and enhanced payment without the employee’s agreement may be viewed as an attempt to circumvent the minimum wage legislation. The words of the tribunal were damning in this decision as it explicitly said that the respondent sought to ‘short-change’ the claimant by its method of calculation.

Employees will now be advised to check their payslips to ensure that they are receiving the correct hourly rate of pay in accordance with minimum wage legislation. Employers would be advised to be proactive and work with their employees to ensure that their calculations are clear and understood.
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