A new report has found 239 employers have paid 22,400 UK workers less than the minimum wage by £1.44m.
The Department for Business, Energy and Industrial Strategy (BEIS) is responsible for minimum wage compliance and enforcement policy and HMRC enforces the NMW Act on their behalf.
Employers named and shamed
The identification of back pay was for a higher number of workers than in any previous single list. This has generated record fines of £1.97m. It has been found that underpayment tends to be at its highest in the first months after a minimum wage rate rise and reduces as time goes on. This time shows that the earliest underpayment dated back to 2011 while the most recent was this year. Employers who pay workers less than the minimum wage have to pay back arrears of wages at current minimum wage rates. They also face financial penalties of up to 200% of arrears, capped at £20,000 per worker. There is a discount if the penalty is paid within 14 days from the serving of the HMRC notice.
From the name and shame list the back payments to staff can be amounts from about £6 per employee up to £7,000. Some employers owe a total of up to £50,000 back pay to staff which they will have to pay on top of the financial penalties. The employers at fault are across the country and vary from solicitors, garden centres, care worker employers, several football clubs, an airline and a number of hand car wash businesses to name but a few.
A naming scheme has been in effect since January 2011 and revised in 2013.
An employer that is breaking minimum wage law is issued with a formal Notice of Underpayment by HMRC. This sets out the arrears of minimum wage to be repaid by the employer with the penalty for non-compliance payable on top. The employer has 28 days to appeal against the Notice. HMRC will refer the matter to BEIS if they do not receive an appeal or it is unsuccessful. BEIS then consider the business for naming once the HMRC case closure letter has been issued to the employer.
The employer will have 14 days from the date of the HMRC closure letter to make representations to BEIS outlining whether they come under any of the exceptional circumstances for naming and shaming.
- naming by BEIS carries a risk of personal harm to an individual or their family
- there are national security risks associated with naming in this instance
- other factors which suggest that it would not be in the public interest to name the employer
In all cases where an employer makes representations to BEIS, the employer will need to provide evidence in support of their case.
Employers have a personal responsibility to ensure that they are paying their workers the correct minimum wage rate.
Civil enforcement is the primary means of enforcement. This is sufficient in the great majority of cases. For the small minority of employers that are persistently non-compliant, criminal investigation is appropriate. If proven, is punishable by an unlimited fine.
The following are offences under the National Minimum Wage Act:
- refusing or wilfully neglecting to pay the NMW
- failing to keep records of pay
- falsifying or allowing the falsification of records
- producing false records or information
- delaying or obstructing enforcement officers
- refusing or neglecting to answer an enforcement officer’s questions
- refusing or neglecting to furnish any information or produce any document when required to by an enforcement officer
National minimum wage rates
|Year||25 and over||21 to 24||18 to 20||Under 18||Apprentice|
Who gets the minimum wage
Workers must be at least school leaving age to get the minimum wage and 25 or over to get the National Living Wage. A contract for any payments below the set wages is not legal.
Workers are also entitled to the correct wage if there’re:
- agency workers
- trainees or on probation
- agricultural labourer
- offshore employee
- casual labourer
- homeworkers paid by the number of items they make
Unlawful reasons for making underpayments
The top 5 reasons for National Minimum and Living Wage underpayments in this round were:
- taking deductions from wages for costs such as uniforms
- underpaying apprentices
- failing to pay travel time
- misusing the accommodation offset
- using the wrong time periods for calculating pay
Low Pay Commission Chairman Bryan Sanderson said:
It is crucial that employers understand their responsibilities and workers know their rights around the minimum wage. That is why active enforcement and effective communication from Government is so important.
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