Hamilton House Medical Limited v Hillier
Every year the Low Pay Commission sets a basic rate as allowed for under the 1999 National Minimum Wage (NMW) regulations. In Hamilton House Medical Limited v Hillier, the Employment Appeal Tribunal (EAT) said that if an employee’s hours of work always attract premium rates of pay, the rate on which those are calculated must be the basic rate set under the regulations.
The claimant’s union, Unison, instructed Thompsons to act on her behalf.
Ms Hillier had worked for the Civil Service Benevolent Fund since 1998 when her current employer bought the care home where she worked. Her terms and conditions transferred over under the Transfer of Undertakings (Protection of Employment) Regulations.
Under her original contract, her basic rate of pay was £4.38 per hour plus a geriatric lead allowance. She then started working nights for which she was paid time and a third for weekday nights and time and two-thirds for weekend nights.
Her payslips from 2000 to 2002 showed she was paid a basic rate of £4.85 with enhanced rates for weekday nights and weekend nights. However, later pay slips showed a rate for night working only and not the basic rate. Her employer froze her rate of pay from the date of the transfer.
She claimed that her employer was in breach of the NMW regulations because her basic rate of pay was below the minimum rate.
And the tribunal agreed. It said that by continuing to pay her at the flat rate that she was on in 1998, her employer had failed to pay her the national minimum wage in relation to her basic pay.
It concluded that Hamilton House Medical “cannot look at the night rate as the final figure. What the Claimant was entitled to was the national minimum wage plus a third or two thirds according to which day she worked. To fail to pay her that is an unlawful deduction of wages."
The employer appealed, arguing that if an employee is always paid at premium rates, then those rates become their basic rate which would mean that Mrs Hillier’s pay was actually above the NMW.
The EAT said that the key issue was the meaning of the words "The lowest rate per hour payable to the worker in respect of time worked by him involving those duties during the pay reference period” in regulation 31(1)(c)(i) of the regulations.
It decided that the lowest rate payable during the reference period clearly had to be the minimum sum due under the contract of employment, as the regulation was intended to cover payments under the contract and not some other arbitrary amount. The employer had confused the word “paid” with “payable”.
It pointed out that the philosophy of the regulations was “clearly that an employee's basic minimum wage before overtime enhancement or other allowances should not fall below the statutory minimum and it seems to me that it would be completely contrary to the purpose of the legislation if that obligation could be avoided simply because an employee chooses to normally work those hours when she would be in receipt of some enhancement”
Mrs Hillier’s case was decided in the year of the 10th anniversary of enactment of the National Minimum Wage Regulations and it shows that it is just as important today as it was then in preventing employers from exploiting their employees.