National Minimum Wage shock headline (Or is it?)

After a two-year pause (following the reforms to ensure that only the worst offenders were targeted) the Government recently relaunched its naming and shaming of employers who have been prosecuted for NMW breaches between 2016 and 2018.

HMRC has published and named 139 companies, including major household names, that have underpaid their employees and have been fined. The offending companies, which include Tesco, Superdrug and Pizza Hut, failed to pay minimum wages amounting to £6.7 million to over 95,000 workers.

Gone rogue?

The numbers alone certainly look shocking and may well have a lot of people scratching their heads as to how this can happen, particularly when it involves such large employers who you would surely expect to be aware of the rules?

However, despite HMRC (the body that led the investigation) announcing that the publication of the list was intended to serve as a warning to “rogue employers”, is it really that simple? And is this the only reason behind what, on the face of it, looks like a flagrant breach of employment legislation?

The Cambridge English Dictionary definition of the term ‘rogue’ is: “behaving in ways that are not expected or not normal, often in a way that causes damage”.

It is questionable that this term accurately reflects the actual outcome. As pointed out by Charles Cotton, senior policy adviser at the CIPD, these regulations can be complex, and some employers might break this law inadvertently because of lack of resource or expertise.

One of the main causes of NMW breaches was workers being made to cover work-related costs, which would take their pay below the NMW, such as paying for uniforms, training, meals, or parking fees. In addition, some employers failed to raise workers’ pay after they had a birthday which should have moved them into a different NMW bracket.

Two other common reasons for underpayment included failing to pay the correct rate to apprentices and failing to pay workers for time worked, such as for additional work before and after their shifts or rounding clock-in time to the nearest hour.

Doing the right thing

So it is correct for employers to be fined if they are deliberately flouting the law on paying minimum wage. However, we do need to put these headlines in perspective and recognise that not all breaches of minimum wage rules are intentional.

All of the employers named in the press release have now paid back their workers and were also forced to pay financial penalties, in addition to being added to the naming and shaming list. One would therefore hope that these employers have ensured that they now have the correct measures and internal processes in place to avoid this happening in the future.

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National Minimum Wage is not optional

Business Minister Paul Scully has said:

‘Paying the minimum wage is not optional, it is the law. It is never acceptable for any employer to short-change their workers, but it is especially disappointing to see huge household names who absolutely should know better on this list.

‘This should serve as a wake-up call to named employers and a reminder to everyone of the importance of paying workers what they are legally entitled to.

‘Make no mistake, those who fail to follow minimum wage rules will be caught out and made to pay up.’

Absolutely no one can argue against this statement, but this latest published list does serve to highlight the importance of employers being aware of what they need to do and how to do it, particularly with changes such as the reduction in age from 25 to 23 for the higher amount from April this year, otherwise they too could find themselves on the Government’s list of “rogue employers”!

Changes from April 2021:

*If under 19 or in first year of apprenticeship (otherwise refer to age bands). The apprenticeship rate does not apply to Higher Level Apprenticeships.

Further information on National Living and National Minimum Wage rates can be viewed at: National Minimum Wage and National Living Wage rates.

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