One of our clients wants to introduce fines for employees that are late to work, are they legally allowed to do this?
Dealing with repeated instances of lateness can be frustrating for your client as this can have a knock-on effect on productivity and their ability to meet customer demand. However, issuing financial penalties to employees for arriving late to work is a contentious issue and our client should tread carefully here.
Generally speaking, the use of penalty clauses to punish employees for arriving late to work is unlawful. This means it would be inappropriate for our client to fine an employee a sum of £100 for being 15 minutes to work, as this amount is not a genuine pre-estimate of loss. Although some companies may have similar practices in place, these are risky and will be open to legal challenge.
Having said this, the onus always rests on employees to attend work on time and the obligation for our client to pay only arises when staff are ready, willing and available for work. Therefore, if our client’s employee is 15 minutes late to work then it would be appropriate to deduct the equivalent amount of pay from their wages.
As this would still amount to a deduction in wages, it is essential to obtain employees’ prior written consent beforehand, by incorporating this clearly into employment contracts or staff handbooks. Deductions of this nature are excluded from the National Minimum Wage (NMW) obligations, meaning your client will avoid punitive action from HM Revenue and Customs if these deductions take employees’ wages below the minimum threshold.
At the same time, our client may want to consider other measures to reduce lateness at work. Some employers allow their staff to ‘work the time back’ if they are late, either at the end of their shift or throughout the working week, to prevent them from missing out on wages. Removing this safety net may encourage staff to place a greater emphasis on arriving at work on time. However, our client should consider how this could have a disproportionate impact on staff with disabilities or childcare commitments before their shift starts.
Our client should certainly ensure that they acknowledge every instance of lateness and ask staff to explain why they were unable to arrive at work on time. Lateness should also be recorded clearly so our client may identify when this is becoming a regular issue and where further disciplinary action may be required. 
 Reproduced with permission of Croner Taxwise