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 (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 the Section 9 of the Limitation Act 1980 applied to the case and acted as a back-stop to his claim.

What was the outcome?

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.

Our Employment Specialist, Lucy Watson, comments on the recent findings by the EAT. “This recent case emphasises the important for Employers to comply with the National Minimum Wage Act 1998 and gives a stark warning that it will not automatically be assured that an employee’s claim would be limited to the 6 years, prior to a claim being lodged.”

“The Employer in this case failed to pay their employee the National Minimum wage for over a decade and following a judgement, in the Employee’s favour, were ordered to pay him damages for the 15 year period and not the 6 years prior to lodging the claim.”

If you would like advice in relation to unlawful wage deductions, call Tayntons Solicitors on 0800 158 4147 to make an initial appointment with our Employment Specialist.

Coletta V Bath Hill Court (Bournemouth) Property Management Limited. Case Number: UKEAT/0200/17.


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