Why are employers breaking minimum wage law? ‘don’t be a Scrooge – pay your staff properly’

Government has named and shamed another 208 businesses which failed to pay the minimum wage to 12,000 of the lowest paid workers.

What are employers doing wrong?

The employers named underpaid workers in the following ways:

Deduction and Dress codes

37% – deductions that reduce minimum wage pay, for example workers out of pocket to comply with the dress code.

Deductions for the benefit of the employer and salary sacrifice arrangements always reduce the pay used for minimum wage compliance calculations. It’s not about the rate paid, it’s all about the rate received.

Training, trial shifts and travel

29% – unpaid working time such as mandatory training, trial shifts or travel time

It is still surprising the number of employers who believe their employees need to undertake work training or ad-hoc meetings in their own time and at the employees own cost.

Apprentices

16% – failing to pay the correct rate to apprentices

Is the job really an apprenticeship at all, is any educational training involved, is there a training agreement etc. The Apprentice rate is limited in its applicability.

Failing to increase

11% – not increasing NMW pay in line with government rises, or paying the wrong minimum wage rate, for example paying a 23 year old the 21-22 year old rate.

The NMW rates apply to pay reference periods beginning on or after 1st April annually. Are employers making sure the uplifts happen at the right time? And for those on maternity leave, the increase in NMW/NLW are pay increases under the Alabaster ruling, so SMP amounts may need to be recalculated and adjusted retrospectively.

The named and shamed

  • 208 businesses named and shamed by government for failing to pay their employees the minimum wage
  • employers ordered to repay workers and face penalties of nearly £2 million after breaches left around 12,000 workers out of pocket
  • Business Minister Paul Scully: “We want workers to know that we’re on their side and they must be treated fairly by their employers, which is why paying the legal minimum wage should be non-negotiable for businesses.”

The 208 employers were found to have failed to pay their workers £1.2 million in a clear breach of National Minimum Wage (NMW) law, leaving around 12,000 workers out of pocket.

Companies being named range from multinational businesses and large high street names to SMEs and sole traders, in a clear message that no employer is exempt from paying their workers the statutory minimum wage.

These businesses have since had to pay back what they owe to staff and also face significant financial penalties of up to 200% of what was owed, which are paid to the government. The investigations by Her Majesty’s Revenue and Customs concluded between 2014 and 2019.

Minister for Labour Markets Paul Scully:

We want workers to know that we’re on their side and they must be treated fairly by their employers, which is why paying the legal minimum wage should be non-negotiable for businesses.

Today’s 208 businesses, whatever their size, should know better than to short-change hard-working employees, regardless of whether it was intentional or not.

With Christmas fast approaching, it’s more important than ever that cash is not withheld from the pockets of workers. So don’t be a scrooge – pay your staff properly.

The government is determined to make work pay, having recently announced a significant rise to the National Living Wage (NLW) from April 2022. This will lead to a pay rise for some of the lowest paid workers in the UK, with workers on the National Living Wage seeing a 6.6% increase to £9.50 an hour. This is the biggest increase to the National Living Wage since its introduction and keeps the government on track to achieve its manifesto commitment for the NLW to equal two-thirds of median earnings by 2024.

‘There is no excuse for underpaying workers‘

Whilst not all minimum wage underpayments are intentional, there is no excuse for underpaying workers. Clear guidance for employers on pay is available on GOV.UK, and today the government has published additional advice about breaches and the steps employers should take to make sure they pay their workers correctly:

Anyone entitled to be paid the minimum wage should receive it, and robust enforcement action is taken against employers who do not pay staff correctly. Since 2015, the budget for minimum wage enforcement has doubled with the government having ordered employers to repay over £100 million to 1 million workers.

HMRC consider all complaints from workers, so workers are being reminded to check their pay with advice available through the Check your pay website.

Bryan Sanderson Chair of the Low Pay Commission:

The minimum wage is a success story welcomed by employees and employers alike, but it only works if everyone without exception obeys the law. We hope this latest naming round can continue to raise awareness of the most common mistakes businesses make and help protect low-paid workers from unfair treatment.

Who are the big names shamed?

Some of the more widely known brands named and shamed in the list of 208 employers include:

  • The tanning shop (the Feel Good Group)
  • Mitie
  • House of Fraser
  • Go Ahead London
  • Hays specialist tecruitment
  • Waterstones
  • Accor
  • Lancashire County Cricket Club
  • Calor Gas
  • Matalan
  • Schuh

How can PAYadvice.UK help.

PAYadvice.UK can assist employers in understanding the challenging areas of Minimum pay and where businesses have risks.

We can undertake friendly consultations to identify areas employers need to focus on and can establish contacts with NMW specialists.

We can assist employer with questions, guidance and advice.

PAYadvice.UK 10/12/2021

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