Keeping Records in relation to National Minimum Wage

When we first had the Working Time Regulations we were told we would have to record breaks.

I can recall it still, we all thought exactly how are we going to do that given that for most employees the timing of breaks has to be flexible to meet the needs of the business.

Thankfully that was revised and whilst we have to show records of holiday, which would be particularly important if there was disagreement about the amount of holiday that the employee has taken.

When it comes to the National Minimum Wage (NMW) there is a requirement to keep records.

When the HMRC audit compliance with the NMW the employer has to be able to show they have been compliant. Where such audits have taken place I have heard that the auditors make ‘requests’ for documents and employers do have time to provide the information. However, if information is to be provided, it has to have been retained in the first place.

So what records to show compliance with National Minimum Wage are important?

• Records of signed contracts of employment. Being able to show the hours someone is contracted to work over the week, month, year and their pay will help to show compliance.
• Records of any deductions made (subject to what is allowed by the National Minimum Wage)
• Details of any training deductions. If you are to deduct for training for example, have you retained the training clawback agreement showing that the employee has agreed to a deduct for training that they have volunteered to complete if they decide to withdraw themselves from the course, or if they are removed by the provider, or if they resign during or after a course (subject to the agreed clawback).
• Records of any timesheets. If someone works variable hours you will want to retain records of hours worked.
• Records of any commission payments.
• Records of any payments made. Showing a breakdown on what was paid (itemisation) is important for compliance. 6 years of payroll records are required. Employees can request their pay records and unlike Data Subject Access Requests (DSARs), employers only have 14 days to comply.

As a side note providing an employee with an itemised pay statement (physical or digital) is a requirement of the Employment Rights Act 1996.

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