UK Companies Named and Shamed for Failure to Pay Correct Minimum Wage

Hundreds of companies and employers in the United Kingdom have been named by the government for failing to pay their workers the National Minimum Wage (NMW). In total, 202 employers ranging from reputable high street brands to sole traders and other small businesses were found to have failed to pay workers at least the minimum wage. In naming and shaming businesses, the Department for Business and Trade (DBT) sent out a clear message that no employer is exempt from paying the statutory minimum rate.

Summary of the Department for Business and Trade Findings

An investigation by the Revenue and Customs Department carried out between 2017 and 2019 found that over 60,000 workers were left out of pocket to the tune of almost £5 million.

The department concluded that not all minimum wage underpayments were intentional, but it meant that some workers were not correctly renumerated nonetheless. High street giants such as WHSmith, Marks and Spencer, Lloyds Pharmacy and Argos among others were all identified in the report.

Others named in the list of 202 organisations included hotels and restaurants to construction companies, taxi firms and nurseries. Some football clubs, schools, and holiday parks also made the list.

The investigation found that workers with the lowest wages were underpaid for a variety of reasons. For example, 39% of businesses failed to pay workers the correct wages for time worked. In addition, 21% of employers paid incorrect apprenticeship rates while another 39% had deducted wages from workers’ pay. The list included businesses of all sizes, all of whom had to repay staff and face penalties.

Key Takeaways for Employers

One of the key takeaways for employers is that while National Minimum Wage legislation can be complex, businesses can face serious liabilities if they breach the law. The current minimum wage stands at £10.42 for over 23-year-olds at the time of writing, but this changes annually.

The DBT noted that while not all breaches were intentional, there was still no excuse for underpaying workers. For example, WHSmith misinterpreted rules around reimbursing its workers for uniforms while M&S delayed paying temporary staff.

Other reasons cited in the report as common excuses for underpaying workers included not renumerating workers for time spent in compulsory meetings or hours earned whilst travelling between clients and time spent in training, such as inductions and during security checks. In addition, some companies failed to compensate workers for handovers between shifts, opening or closing duties and even time spent on stocktaking or cashing up.

Ultimately, the potential sanctions for failure to pay the NMW can lead to a fine of up to £20,000 and a minimum of £100 per employee. HMRC has the authority to issue a notice to pay any money owed to workers backdated to a period of up to 6 years. The department can also conduct legal proceedings against offending companies and share their names with the DBT which will then place them on a public list.

In other words, employers that do not comply face massive fines, criminal proceedings or the headache of being named and shamed in public, as these organisations have found. Businesses will need to ensure their NMW procedures are in order and comply with current legislation. Getting it wrong can have consequences that include a significant impact on their business, reputation, and finances.

Employers will need to ensure staff are being paid in line with NMW legislation. Businesses should seek legal advice when reviewing their processes and policies relating to employee wages and the National Minimum Wage.

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