The NDNA says that some nurseries included on the Government’s ‘naming and shaming’ lists for not meeting the national minimum wage are victims of genuine error.
So far, six nurseries, along with other businesses, have been included on the Department for Business, Innovation and Skills’ (BIS) ‘naming and shaming’ lists. The lists were published in January and February.
This follows the revision of the National Minimum Wage Naming Scheme in 2013 to automatically consider naming all employers that are issued with a Notice of Underpayment in order to deter employers that are tempted to break the law.
One nursery was ‘named and shamed’ in January because the way its childcare salary sacrifice scheme was administered meant it unwittingly breached the rules.
Two other nurseries on last month’s list, including Young Friends Nursery in Hove, unwittingly broke the rules concerning the rate of pay for apprentices.
All three nurseries re-paid the money they owed to members of staff and a fine.
Despite this, they were still included on the lists, a move which they say is unfair and that they were unaware of.
The NDNA is calling upon the business secretary Vince Cable to take a more common sense approach.
Purnima Tanuku, chief executive of the NDNA, said, ‘Naming and shaming in this way is unfair. It gives the impression that hardworking nurseries with otherwise good reputations are shortchanging their staff.
‘We would never defend an employer that didn’t pay its workers a legal wage, but some nurseries are unintentionally breaking the rules.’
She added, ‘Though NDNA has worked hard to warn members about the rules, some businesses are still falling foul of them.’
‘The Government rules are complicated and difficult to follow for small businesses.
‘In the short-term, nurseries need better advice, and in the long-term, the rules should be changed.’
A BIS spokesperson said, 'Employers have a duty to ensure that they pay the national minimum wage.
'All employers that are investigated by HMRC and issued with a Notice of Underpayment will be named under the scheme. Only employers that meet one of the three exceptional circumstances or have arrears of £100 or under will not be named. Making a mistake is not a good enough reason to avoid being named.
'The Pay and Work Rights Helpline is free and confidential, and can give advice to both employees and employers who would like help and advice about the national minimum wage.'
Young Friends Nursery
The nursery, winner of three Nursery World awards, was fined by HMRC in 2013 after taking on an apprentice who, after being granted funding from the local authority to train for her NVQ seven months after her start date, changed her mind about completing her childcare qualifications.
Nursery owner Louise Lloyd-Evans told Nursery World that they kept the employee on and continued to pay her an apprentice's wage, unaware that they were breaching the law.
The law states that apprentices aged 19 or over can only be paid an apprentice's wage for a year.
The nursery's misdeamenour was reported to the HMRC which ruled that the setting must pay the employee a full wage from when she was first hired. The nursery was also made to pay a fine, which the HMRC returned to them for being so co-operative.
Ms Lloyd-Evans said Young Friends subsequently changed its apprentice contracts to paying staff the National Minimum Wage as soon as they start at the setting.
However, this year the nursery receieved a letter from HMRC to tell them they would be on the Government's 'naming and shaming' list, days before it was published.
Ms Lloyd-Evans said, ‘As far as we were concerned the matter had been dealt with, so it was a real shock to receive the letter.
‘When we questioned HMRC about being included on the 'naming and shaming' list, they claimed they had sent a previous letter, which we did not receive, stating this would happen and that we could appeal against the decision.’
She added, ‘Including us on the list is really unfair. We are always so careful to follow the law and pay our staff well - so much so that we don’t turn a profit.’
Naming and shaming rules
The Department for Business, Innovation and Skills’ (BIS) revised National Minimum Wage Naming Scheme applies to any employer that is investigated by HRMC and issued with a Notice of Underpayment from 1 October 2013 onwards.
The revised rules state that, ‘An information sheet is given to the employer at the start of the investigation which sets out details about the BIS naming scheme.’
Employers have 28 days to appeal against the Notice of Underpayment. If the employer does not appeal, or an appeal has been unsuccessful HMRC refers the employer to BIS for automatic naming under the scheme.
They can also appeal to BIS against being included on the ‘naming and shaming’ list, but only if they fall under any of the following exceptional circumstances:
- Naming carries a risk of personal harm to an individual or their family;
- There are national security risks associated with naming in this instance;
- Other factors which suggest it would not be in the public interest to name the employer.