The Minimum Wage (Guernsey) Law, 2009 (the “Law”) is expected to come into force on 1 October 2010, together with the Minimum Wage (Prescribed Rates and Qualifications) (Guernsey) Regulations, 2010 (the “Regulations”). It is important that all employers should be aware of their obligations under the Law and the Regulations.

Legal Framework and the Minimum Wage

The Law will give employees the right to be paid a specified minimum hourly rate of pay. All employers are under the obligation to pay at least the minimum wage, regardless of their size.

An employee has the right to be paid the minimum wage if they are older than the compulsory school age (currently 15 years’ old), unless they are an apprentice. An apprentice who is below the age of 18 is not entitled to be paid the minimum wage. An apprentice who is 18 years or over is entitled to be paid the minimum wage, but not for the first 12 months of their apprenticeships.

An employee must be employed and ordinarily working in Guernsey in order to be entitled to the minimum wage. Thus overseas workers (unless they only occasionally work outside of Guernsey) are not entitled to the minimum wage.

The Law gives the Commerce and Employment Department (the “Department”) power to set the rates of the minimum wage by making regulations. Before setting the rates, the Department has a duty to consult local organisations and to take into account various factors, such as the rate of inflation and the economic and trading conditions in Guernsey before setting or changing the rates.

Minimum Wage Rates

The Department has drafted the Regulations and these will be considered by the States of Guernsey in May 2010. It is widely expected that these will be approved. The draft Regulations state the rates set by the Department for two different categories of worker, namely adults and young persons:

The adult rate will be £6.00 per hour. Employees will be entitled to receive this rate if they are at least 19 years of age.

The young persons’ rate will be £4.25 per hour. An employee will be entitled to receive this rate if they are aged between 15 and 18 years old.

An employee is entitled to the rate that applies at the start of a particular pay reference period, even if the rates are changed or the employee becomes entitled to a different rate during that reference period. The Department has yet to set the pay reference period. However, in the UK this period is one month, unless the employee is paid by reference to a period that is shorter than a month (e.g. a week), in which case it will be that shorter period. It is expected that the Department will apply the same pay reference period used in the UK.

Exclusions and Special Classes of Person

Fisherman (who are paid only a share of the profits or gross earnings of the vessel they are employed on), voluntary workers (provided they do not receive any monetary benefits except for expenses, or other benefits in kind except for subsistence or accommodation) and prisoners are not entitled to the minimum wage.

Agency workers who are not party to the contract between the agency and its customer and who qualify to receive the minimum wage are entitled to receive it from either the agency or the customer, whichever person is responsible for or actually pays them. Employers who use agency staff should make sure that the agency has addressed this point.

Home workers are entitled to receive the minimum wage, unless they are genuinely self-employed. This right is extended to someone who has not personally contracted to do the work, for example, a family member who does a share of the work. Home workers may also include individuals who do not have to work in a fixed place, for example couriers and delivery drivers.

Calculating Pay

The Department is yet to set the method used to determine the hourly rate of pay of an employee. However, in the UK the rate of pay is calculated on the basis of the total pay earned over the pay reference period, divided by the total number of hours worked in the reference period. The factors to be taken into consideration when calculating the average hourly rate include:

  • Gross pay
  • Any payments of benefits (e.g. pension contributions)
  • Any deductions (e.g. costs to cover tools or uniforms, but not tax or national insurance)

In the UK the number of hours worked is calculated with reference to the time worked, salaried hours of work, output of work and also unmeasured work. It is expected that the Department will apply a similar method for determining the hourly rate of pay.

Keeping Records

Employers are under a duty to keep records which are sufficient to establish that its employees are being paid a rate at least equal to the minimum wage. Employees who reasonably believe that they are being, or have been, paid less than the minimum wage are entitled to inspect those records after submitting a written notice to their employer. Records must be kept for three years.

Enforcement

If an employer fails to produce or refuses to allow inspection of the records of an employee’s salary, the employee may bring a complaint within 3 months of the failure or refusal (unless it was not reasonably practicable to do so in that time) to the Employment and Discrimination Tribunal (the “Tribunal”). The Tribunal may make an award for the employer to pay the employee a sum equal to 80 times the hourly amount of the minimum wage in force at the time the award is made (which will initially amount to £480 for an adult).

If an employee does not receive the minimum wage to which he is entitled, he may bring a claim in the Guernsey courts against his employer for breach of contract for the sum he is owed, or bring a complaint making a claim for that sum in the Tribunal.

An employee may also bring a claim in the Tribunal for unfair dismissal if his employer dismisses him or takes any detrimental action against him: because of his rights to the minimum wage or to a different minimum wage rate; in respect of any action the employee has taken to receive the minimum wage; or, if the employer is prosecuted for an offence under the Law (see below for offences).

The Department can appoint an officer to carry out investigations, including inspection of records. The officer will have the power to issue enforcement notices requiring employers to make up past payments where they have failed to pay the minimum wage. The officer also has the power to bring a complaint on behalf of an employee to the Tribunal to recover sums that should have been paid to the employee.

Offences

It is an offence for an employer to refuse or wilfully neglect to pay the minimum wage, fail to keep records, keep false records, provide false records or information, intentionally obstruct or delay an enforcement officer or refuse or neglect to answer questions or provide information to an enforcement officer.

The lesson is clear: master the minimum for maximum protection.