National Minimum Wage – Exploited Hotel Workers Win Case

National Minimum Wage – Exploited Hotel Workers Awarded Almost £60,000

The National Minimum Wage (NMW) has been enforced in Britain for over 20 years, yet the repugnant exploitation of low-paid workers has by no means been eradicated. A case on point concerned a couple who were between them paid £250 a week for working long hours in a hotel.

The married couple managed the hotel on behalf of its owner. They worked seven hours a day, seven days a week, for which they were each paid £125. They were accommodated free of charge in the hotel, where they had worked for three and a half years. They were initially told they would only be required to work two or three hours a day, but that was one of many promises broken by the owner.

Following an investigation, HM Revenue and Customs (HMRC) found that the owner had failed to pay the couple the NMW. He received a £40,000 penalty and was ordered to make good his default by paying the couple a total of £59,779. The owner challenged those bills before an Employment Tribunal (ET) but his plea that the couple were self-employed, and therefore not entitled to the protection of the National Minimum Wage Act 1998, fell on fallow ground.

Noting the level of control that he exerted over them, the ET found that they were treated as employees throughout. They were paid through the PAYE system and there was an ever present mutuality of obligation between them and the owner. The attempt to categorise them as self-employed was, the ET found, a step taken to evade tax and/or other statutory and contractual commitments, such as holiday and sick pay and the requirement to pay the NMW.

The owner also argued that, when free accommodation and commission payments were taken into account, the couple in fact received the NMW. Rejecting that argument, however, the ET found that commissions on bookings were only paid to the couple at a late stage in their employment as a means of deflecting attention from the HMRC investigation.

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