I have a new client, who started trading few weeks ago, as small agency company. He gets a contract for £6.03 per hour from his clients and pays his employees £5.00 per hour,(age 22 and above)
I am not very sure what i should do here, looking at the amount he gets the Job, and the rule under NMW. Do any one have any advice or suggestion?
He should be paying his staff the minimum wage at least. That's £6.08 an hour. As you say he earns less than this. I think I'd let him know, after all it's him that is committing the offence. Even paying £5 an hour, I cant see how this contract can possibly turn a profit.
Thanks everyone, I will say that to him, now do I continue to process his payroll even if he still pays the £5.00 per hour or Not? Does it affect me, if he signs a document saying that he is Knows about the NMW Rules but wish to continue the way he is doing now.
Yes, I'll second the earlier comment that a margin of 16% on sales is far too low for an agency to conceivably be a profitable operation. I suspect that the client is taking him to the cleaners. The minimum rate demanded by an agency has to be about £10/hour, IMHO.
Employees must be paid NMW at least.
And don't forget to allow for holiday pay, which is 12.07%. By the time he's added that on even with the current contract he'll be making about 4%. It is illegal for holiday pay for casual workers to be rolled into normal pay rates. It should be paid separately, and additionally. Anyone earning over £140/week will also be having employers NI added to their cost of employment, which would move the contract into loss before you even consider any overheads or operational expenses.
