Two British telecommunication companies have been ordered to pay wage arrears of almost £100,000 to almost 200 of their call-centre telesales workers after it was ruled that they had been underpaying them over a substantial period of time.
The two companies, Axis Telecom Ltd and Servizon Ltd, were taken to the Employment Tribunal by HM Revenue and Customs (“HMRC”) after it was discovered that the companies were incorrectly classifying employees as apprentices. This miscategorisation led to the employers underpaying their employees for the work undertaken.
Under the National Minimum Wage Act 1998 workers have the right to a specified minimum hourly rate of pay, which is regularly updated. Employers are obligated to pay the National Minimum Wage and there are no exceptions for small employers. However, the value of the National Minimum Wage that a worker must be paid varies depending upon the worker’s age and whether they are an apprentice or not. Only workers over the age of 21 are entitled to the full rate of the National Minimum Wage and apprentices are paid substantially less than non-apprentices. For example, a worker aged 18 is entitled to be paid at least £4.98 an hour whereas an apprentice aged 18 is only entitled to be paid £2.65 an hour. Whether a person is a worker or an apprentice depends upon the facts and the circumstances of the matter.
An Employment Judge heard evidence from both parties at a hearing in March 2013. The employers argued that the relevant persons were apprentices and not workers. HMRC disputed this and argued that the relevant persons were not in fact apprentices but were workers for the purposes of the National Minimum Wage Act 1998. The Employment Tribunal issued a ruling on 26 March 2013. It found that the relevant persons were workers – and not apprentices – and that they were therefore entitled to be paid the higher rate of the National Minimum Wage. Axis Telecom Ltd was ordered to repay £21,224.53 to 14 workers, and Servizon Ltd was ordered to pay £75,117 to 183 workers. In addition, a penalty of £5,000 was imposed on each company for failure to comply with the relevant legislation.
HMRC commented after the ruling that “we are pleased the Employment Tribunal has given this ruling in support of the workers who were being underpaid. Our aim is to enforce the law and protect vulnerable workers.”
Chris Hadrill, employment solicitor at Redmans, stated that “this case shows the importance of making sure that you get the employment status of your “employees” correct – a failure to do so can cause all sorts of problems, including failure to pay the correct National Minimum Wage and exposing yourself to unexpected unfair dismissal claims, among others”.
London Compromise Agreement Solicitors are compromise agreement solicitors based in London
Employment Law Advice Solicitors
