Based on a real case we are currently managing. Names, business details and terms have been changed for privacy.
The Scenario (July 2015)
Summer owns a beauty salon and employs eight members of staff. All are paid a basic hourly rate plus commission, based on individual sales.
Summer is happy with her team. They are good workers and she wants them to stay.
The Background
Summer employs:
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Tracey (17)
A trainee on a government apprenticeship scheme.
Paid £2.50 per hour, working a minimum of 30 hours per week. -
Melanie (19)
In the second year of her apprenticeship.
Paid £2.73 per hour for a minimum of 30 hours per week.
Melanie queries her pay, but Summer insists it is correct. -
Linda (16)
A school leaver who started in June 2015.
Her college apprenticeship does not start until September.
Summer issues a normal employment contract and pays £3.79 per hour from July to August.
When Linda starts her apprenticeship, her pay will revert to £2.73 per hour.(During this time, Summer becomes unsure if Linda should have been paid the apprenticeship rate from the start.)
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Kirsty (24)
The longest-serving employee.
Paid £6.10 per hour plus commission.
She earns approximately £8.00 per hour, well above minimum wage.
Summer also employs three additional beauticians and a salon manager.
The Facts Employers Should Know
Wages and Commission
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Cash-in-hand payments and commission count as wages
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They must be included when calculating:
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National Minimum Wage
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Tax
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National Insurance
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➡ Tracey is not being paid the National Minimum Wage
Apprenticeship Rates
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The apprentice minimum wage is £3.30 per hour
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This applies to:
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Apprentices aged 16–18
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Apprentices aged 19+ in their first year
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Being new or inexperienced does not remove entitlement
➡ Melanie is not being paid the correct National Minimum Wage
Apprentices Over 19 (After Year One)
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Apprentices aged 19+ who have completed their first year must be paid the age-related minimum wage
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This rate is £5.30 per hour
Employment Contracts Matter
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If a standard employment contract is issued, age-related minimum wage applies from day one
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Apprenticeship rates apply only from the start of the apprenticeship
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If an apprenticeship contract is issued from the start, the apprenticeship rate applies immediately
➡ Linda is being paid correctly
Commission and Minimum Wage
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Kirsty earns £6.10 per hour plus commission
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Her total hourly earnings exceed the minimum wage for her age (£6.70)
➡ Kirsty is being paid correctly
The Bigger Issue
The remaining four employees are also not being paid the current minimum wage.
The Outcome
Once employees discovered the issue:
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Several staff members were extremely unhappy
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Significant back pay was owed
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Summer had to reimburse large sums
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She was fined and publicly named by the government
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Former employees contacted her to check if they were owed back pay
Summer also did not have:
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Up-to-date contracts of employment
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A company handbook
Legal Obligations for Employers
Employers must:
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Pay at least the National Minimum Wage
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Provide a written statement of employment particulars for employment lasting one month or more
All businesses with staff should have:
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Up-to-date employment contracts
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An employee handbook
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Clear, accessible policies and procedures
These protect both employees and the business.
National Minimum Wage Updates (October 2015)
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Over 21s: £6.50 → £6.70
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Apprentices: £2.73 → £3.30
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Ages 18–20: £5.13 → £5.30
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Ages 16–17: £3.79 → £3.87
Why This Matters
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In February 2015, 70 employers were named for failing to pay minimum wage
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One care provider owed £37,500 to 184 workers
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Employers faced fines and reputational damage
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The National Living Wage launched in April 2016 at £7.20 per hour for workers aged 25+
Need HR Support?
If you’re worried this could affect your business, or you need help with HR compliance, we’re here to help.
📞 01903 688789
✉️ makeithappen@mbsmih.com
Our flexible HR packages include:
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Fixed-fee retainers
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One-off issue support
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Project-based HR solutions
We provide all required legal documentation and help you manage people confidently, compliantly, and fairly.