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The UK's biggest car dealer, Pendragon, which also sits just outside the UK's top 20 leasing firms, has been hit with fines and compensation orders totalling £35,000 after HM Revenue and Customs ruled that the company paid at least 40 of its staff less than the minimum wage.
HMRC said Pendragon deducted money for lease car payments and salary sacrifice schemes, which brought what some staff received as a basic wage (without commission, bonuses or other extras) below the national statutory minimum.
That's currently £6.08 per hour for staff aged over 21 (rising to £6.19 from September, in line with Budget announcements).
Staff were entitled to receive at least this much, even if they'd signed to say that they were willing to be paid less.
Pendragon has declined to comment, but it is understood that those identified by HMRC worked at the company's Nottingham headquarters. HMRC says that together the staff are owed £30,254 to bring what they earned up to the statutory minimum. Pendragon has also been ordered to pay a £5000 fine for 'under-paying' employees.
As is increasingly common within large companies, Pendragon offers a range of employee benefits.
These fall within its 'What's in it for me?' package and include a pension plan and a bonus scheme. But the benefits also extend to new cars (even for those who do not need a vehicle for work, or receive one as part of a package), childcare vouchers, or bicycles (under the Government's Cycle to Work scheme).
Such extras are funded by salary sacrifice, where staff agree to give up a slice of their pre-tax pay. It is likely that such deductions mean that some see their net hourly wage dip below the minimum. Generally, part-timers are particularly susceptible along with staff taking maternity leave.
The announcement followed an industrial tribunal held in Sheffield earlier this month. After the hearing, Michelle Wyer, head of national minimum wage enforcement at HMRC, said: "Our aim is to enforce the law and protect vulnerable workers."
Julie Jenner, chairman of the Association for Car Fleet Operators, said this case highlighted the need for firms to take time in setting up such schemes, considering every eventuality: "A typical scheme will take three to six months to establish correctly, and some offers that we've seen to do this more or less overnight are unrealistic."
Guy Liddall, MD of industry recruitment and HR specialists Motor Trade Selection, offered this advice: "Anyone who has sales execs or others on low basic salaries should check their legal position immediately with someone suitably expert."
Another source we spoke to recommended that companies started with the minimum wage as a baseline, taking care that salary sacrifice schemes didn't erode basic pay.
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