Subpostmasters Paid Less than NMW

[obiwanknobe]

Is the Government paying their employees less than the National Minimum Wage?

Post Office Ltd, as a State Owned company, appears to be doing so.

Many Subpostmasters are currently being paid much less than the minimum wage – as little as £2ph.

Post Office Ltd defend these payments, saying that Subpostmasters are not workers and as such do not fall under the National Minimum Wage Act.

However it appears that Post Office Ltd has not reviewed that position for many years. They have failed to take into account changes they have made to their conditions of employment for Subpostmasters as well as recent Employment Law test cases.

In 1999 a test case in an Employment Tribunal in Inverness (Bain v Post Office Counters [1999] ET 27) it was held that Mrs Bain was indeed entitled to the Minimum Wage and Post Office made changes to that effect for qualifying subpostmasters. However since then that payment has not been reviewed and Post Office continue to assert that Subpostmasters are not workers.

Contract for Services

POL state that subpostmasters are employed under a contract for services rather than a contract of service. The difference being that the subpostmaster is not required to provide personal service and can delegate their work to their own employees. That may or may not have been the case in the past.

However there is now clear evidence to show that a subpostmaster is contractually obliged to provide personal services at the sub post office that they operate. Failure to provide these personal services would lead to the termination of their contract. One such example is the introduction of compliance testing via Horizon Computer System terminals in their office. Subpostmasters are required to read and make themselves au fait with the various compliance topics prior to taking an electronic test on the computer terminal. Failure to do so will result in the termination of the contract.

POL also seem unaware of recent test cases in Employment Law that have further defined the differences between ‘contract for service’ and ‘contract for services’.

In the case of the bricklayers v Redrow (Redrow Homes (NW) Ltd v Roberts & Ors (2004, IRLR 720) the Appeal court found that the contract the Bricklayers signed with Redrow, albeit for provision of services, did in fact require the bricklayers to perform personal service and as a result the bricklayers were entitled to be treated as workers. The Appeal Court also found that the problem occurred as a result of Redrow using a ‘one size fits all’ type of contract which did not provide for the specific case of the bricklayers.

After the decision by the appeal court Redrow changed the contract wording and found themselves back at an Employment Tribunal (Redrow Homes (Yorkshire) Limited v (1) Buckborough (2) Sewell) soon after to defend a similar case based on the new wording of the contract being declared a sham to get around the Working Time Regulations Act. They lost this as well.

Both of these decisions are of relevance to POL and cannot be ignored. The ‘Sham’ aspect of the contract that most subpostmasters have signed is revealed by comparing it to the contract now on offer to the new ‘operators’ of a subpostoffice that has been created for the purposes of the current POL Network Transformation program.

Office Holders

If all else fails, both POL and HMRC, rely on subpostmasters being treated as Office Holders. As such they are treated for Tax purposes by HMRC as being employees of POL and are required to pay NIC.

The rationale behind subpostmasters being defined as officeholders has been lost in time. No one seems to be able to explain how, when and why this was required to be so. It seems very convenient for the Government that Subpostmasters are liable as officeholders for Class I NIC contributions as well as POL being liable for Employer NIC payments.

Now under NT, where an office is closed to be replaced by an identical refurbished office close by, the sham nature of officeholder status is revealed. The new operator now works under a new contract that does not mention the term office holder at all and these operators are no longer paid as employees but by invoices for work carried out.

The status of Subpostmasters as Officeholders under their current contract is also now under scrutiny as a result of recent changes to the IR35 legislation in which HMRC attempts to define an office holder for the purposes of tax evasion by contractors. HMRC state that an office that can be set up or removed by an employer at a whim is no longer an office for the purposes of Income Tax. Further, a long held definition is that an office to which one is appointed must be capable of being filled in succession by another office holder. Since the inception of NT in 2010 that has no longer been the case. The office of subpostmaster cannot be filled by another.

Other Income

POL also rely on the fact that most subpostmasters operate a retail side of their business to generate additional income and that this income must be taken into account when applying minimum wage calculations. Until recently POL may have been able to argue this case as they had no way of knowing the income that the retail side of the business generated for the subpostmaster. However in January of this year, POL paid each and every subpostmaster a sum of £2000 in return for which each subpostmaster had to complete an online survey that provided POL with the details of their retail income. POL has now all the information they require to determine whether or not, even with retail income, subpostmasters are being paid the minimum wage or not.

Impact on POL of National Minimum Wage Act

Should subpostmasters be found to be workers for the purposes of the National Minimum Wage Act then not only will POL have to increase the pay to Subpostmasters but they will have to back date these claims. They would also find themselves liable for holiday pay, maternity and paternity leave, sickness as well as the newly introduced Workplace Pension scheme.

Conclusion

The status of Subpostmasters with regard to the National Minimum Wage Act and the Working Time Regulations needs to be tested in court. Changes to legislation and recent similar test cases under employment law tend to suggest that subpostmasters, despite the contract that they have signed, should be classed as workers, and as such be entitled to the safeguards and protection for workers contained within that act.

The interpretation of subpostmasters as being office holders should also be reviewed.

The Government should treat this as a matter of urgency given the amount of recent publicity surrounding Minimum Wage.

[subbie]

This is scandalous the Gov lecture employers about paying the living wage, yet they aren't even paying the minimum wage to the nations sub postmasters and operators. I thought we had a Minister in charge of naming and shaming companies who do not pay the minimum wage, oh yes its Jo Swinson MP..........put yourself on your own list of shame Swinson!!

Subbie