Two hundred and sixty employers have been ‘named and shamed’ by the Government for failing to pay their employees the National Minimum Wage (NMW).
The number of employees affected amounted to over 16,000, and between them they are owed around £1.7 million in back pay. The employers concerned have been fined £1.3 million for the underpayment.
Tackling Non-payment of NMW
This is the thirteenth round of Government naming and shaming for employers who have failed to pay National Minimum Wage and Living Wage rates.
The revised scheme to name employers who break minimum wage law came into effect in October 2013, and is one of a range of tools at the Government’s disposal to tackle this issue. Employers who pay workers less than the minimum wage not only have to pay back arrears of wages to the worker at current minimum wage rates but also face financial penalties of up to 200% of arrears, capped at £20,000 per worker. In the most serious cases employers can be prosecuted.
According to the Government, around 2,500 cases are currently being worked on by HMRC and employers who have been found guilty of breaching minimum wage laws will be named and shamed after their cases have been closed.
Worst Affected Sectors
Businesses in the retail, hairdressing and hospitality sectors were apparently among the most prolific offenders in this round. The most common reasons for errors made include: failing to pay workers travelling between jobs, deducting money from pay for uniforms and not paying for overtime.
“There is no excuse for not paying staff the wages they’re entitled to and the Government will come down hard on businesses that break the rules,” commented Business Minister Margot James. “That’s why today we are naming hundreds of employers who have been short changing their workers; and to ensure there are consequences for their wallets as well as their reputation, we’ve levied millions in back pay and fines.”
“The Low Pay Commission’s conversations with employers suggest that the risk of being named is encouraging businesses to focus on compliance,” added Bryan Sanderson, Chairman of the Low Pay Commission.
“Further, it is good to see that HMRC continues to target large employers who have underpaid a large number of workers, as well as cases involving only a few workers, where workers are at risk of the most serious exploitation,” he said. “It is imperative that the Government keeps up the pressure on all employers who commit breaches of minimum wage law.”
Since 2013, the scheme has identified £8 million in back pay for 58,000 workers, with 1,500 employers fined a total of £5 million. This year the Government says it will be spending a record £25.3 million on minimum wage enforcement.
Rates to Increase Next Year
The Low Pay Commission (LPC), which recommends the rates of the NMW, has recommended that rates increase from April next year, and the Government has accepted its recommendations.
With effect from 1st April 2018 the rates that apply to 18-20 and 21-24 year olds will increase by 4.7% and 5.4% respectively, which are apparently the largest increases for these age groups in a decade. The National Living Wage will increase by 4.4%.
To avoid falling foul of NMW legislation, it is important that employers conduct regular reviews of their payment policies and practices. Legal advice should always be sought if any issues of compliance arise.
For expert legal advice on the National Minimum Wage, and other areas of employment law, then contact our specialist employment lawyers today.