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  • Overview

    On the 31st December 2020 HMRC published the identity of 139 companies who have failed to pay national minimum wage (NMW) to their employees between 2016 and 2018. A total of more than 95,000 workers were short-changed, with companies collectively underpaying their employees by £6.7 million during this time period.

    The list of companies includes smaller businesses, as well as surprisingly household names such as Tesco PLC and Superdrug. The companies found in breach must pay back the money to employees at today’s NMW rate, as well as financial penalties of up to 200% of arrears at a cap of £10,000 per worker. All of the companies named in this latest release have paid back their workers, along with any financial penalties due.

    There are a myriad of reasons why employees have ended up being underpaid, however one of the primary causes relates to low-paid workers having to also cover the cost of things such as uniform, training and car parking. Once these expenses are accounted for, many workers would have subsequently been receiving below the minimum requirements. Another major cause for the underpayments is employers failing to raise the wages for employees who have had a birthday which puts them into a higher pay bracket, as the national minimum wage increases at certain age milestones.

    However it should be noted that not all of these underpayments were intentional, far from it, but breaching NMW requirements is an offence that has no lawful justification. Tesco, the biggest offender on the list with their underpayments totalling £5,096,946 involving nearly 80,000 workers, assert that their underpayments were a result of a technical error and that they reported the issue to HMRC themselves. However Bryan Sanderson, Chair of the Low Pay Commission, commented that “there can be no excuses for non-compliance with the minimum wage rates” and that “the companies concerned should be deeply ashamed of their performance”.

    The latest list of companies falling foul of the NMW requirements is the first time a list of companies has been published since 2018, following a suspension to allow HMRC to review the effectiveness of enforcement actions to be taken against employers who breach these rules.

    It is hoped that the continuation of the revised NMW Naming Scheme, coupled with strong financial penalties, will encourage employers to ensure that their processes do not allow for any employee to be paid below the legal minimum, even if it is by mistake.

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    Employment

    We act for businesses of all shapes and sizes and in many different sectors. Our advice covers all aspects of the employment relationship, helping to settle disputes, defending employment tribunal claims and providing immigration compliance audits.

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