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The National Minimum Wage – Long Tail Consequences of Non-Compliance

Failing to pay staff the National Minimum Wage stores up serious financial trouble for the future and employers who do not understand the law will be stung with a longer tail following a tribunal’s guideline decision.

The case concerned a head porter, employed by a property management company, who had for well over a decade been paid less than was required by the National Minimum Wage Act 1998 (NMWA). His claim in respect of unlawful deductions from wages under the Employment Rights Act 1996 (ERA) was upheld by an Employment Tribunal (ET) and he was awarded £44,603 in damages.

In making the award, however, the ET found that it only had power to compensate him in respect of unlawful deductions made during the period of six years prior to his claim being lodged. That was on the basis that the six-year time limit contained within Section 9 of the Limitation Act 1980 applied to the case and acted as a back-stop to his claim.

In upholding his challenge to that ruling, however, the Employment Appeal Tribunal found that his claim was effective from the date on which the NMWA came into force. In accordance with the ERA, the man had brought his claim within three months of the last of the unlawful deductions in the series. By virtue of Section 39 of the Limitation Act, his compliance with that three-month deadline had the effect of disapplying the six-year limitation period. The parties were left to calculate the amount by which the man’s compensation would be increased.



 
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