An award-winning agent tops the list of the government’s latest ‘name and shame’ list of employers that have underpaid their workers.
Kings Group, headquartered in Hertfordshire, has had both its estate agency and lettings agency arms listed after not paying the minimum wage.
It had underpaid 43 members of its estate agency staff by £53,808.91 while the firm’s lettings arms neglected to pay £26,893.43.
It is one of 37 firms named yesterday, with Kings Group making easily the biggest under-payments. The 37 between them are being fined £51,000.
However, while Kings Group has not been prosecuted or fined – it did have to pay an initial penalty of £2,500 – the case looks set to send shock waves through the industry, where it is perfectly normal to pay staff a low basic salary but high commissions.
With minimum wage compliance assessed over a four-week period, the case is a warning for other agency employers to bear in mind that even a high-performing negotiator can earn very well some months, but quite poorly in others.
It could also be possible in some companies for newcomers to fall below minimum wage standards before they started earning commission.
Kings Group has now changed the way it pays staff so that the same amount of commission is paid, but on a more regular basis. It is understood that this has not altered the firm’s overall annual wages bill.
It is also worth bearing in mind, given the long working hours that are also the norm in the industry, that minimum wage is worked out per hour.
Minimum wage is £6.50 an hour for adults and £5.13 for 18 to 20-year-olds. The rate for 16 to 17-year-olds is £3.79 and the apprentice rate per hour is £2.73.
Yesterday, a spokesperson for Kings told Eye: “Kings Group has always paid its sales staff a basic weekly wage plus commission.
“This structure, which is very common in the estate agency and lettings sectors, has enabled its staff to earn extremely good salaries on an annual basis.
“When the National Minimum Wage regulations were introduced, it became necessary to ensure that each four-week period was looked at separately, with no account being taken of the fact that the employee may have been paid substantial sums in other four-week periods.
“When this was brought to Kings’ attention by HMRC, we checked our records and ensured that full payment was made to every individual concerned for those periods where payment had fallen short.
“We have also now adjusted the payment practices to spread payments more evenly between each four-week period and to ensure that we now strictly comply with the regulations.”
Almost 100 employers have now been publicly named by the Government since a new regime came into force in October 2013.
Publication of the latest ‘name and shame’ list – which includes high street retailer H & M and service station company Welcome Break Holdings – was accompanied by a statement from business minister Jo Swinson (Lib Dem) who said: “Paying less than the minimum wage is illegal, immoral and completely unacceptable.
“If employers break this law they need to know that we will take tough action by naming, shaming and fining them as well as helping workers recover the hundreds of thousands of pounds in pay owed to them.
“We are also looking at what more we can do to make sure workers are paid fairly in the first place.
“As well as being publicly named and shamed, employers that fail to pay their workers the national minimum wage face penalties of up to £20,000.
“We are legislating through the Small Business, Enterprise and Employment Bill so that this penalty can be applied to each underpaid worker rather than per employer.”
Kings Group last year won the best agent in Essex awards in the ESTAS and also the gold award for best medium-size letting agent.
The 20-year-old firm has 15 branches in Hertfordshire, Essex and London, and displays both NAEA and ARLA logos.