The National Minimum Wage breaches took place between 2011 and 2018. At least 34,000 workers have been found to be owed over £2.1 million which employers are now being asked to pay, in addition to a further £3.2 million in fines, which demonstrates HMRC’s commitment to ensuring employees are paid above the threshold.
The naming and shaming approach adopted by HMRC was previously cancelled in 2018 but has now resurfaced again, proving to be a powerful way to encourage employers to ensure compliance.
Employers who pay workers less than the minimum wage have to pay back arrears of wages to the worker at current minimum wage rates. They also face hefty financial penalties of up to 200% of arrears - capped at £20,000 per worker - which are paid to the government.
Almost 50% of the breaches related to deductions being made from workers’ wages. Such deductions taking low paid staff below the threshold may be due to deductions from having:
30% represented failures to pay workers for all the time they had worked, such as when they worked overtime. Other examples included:
Employers paying the apprentice rates in error also represented the next highest percentage of failures. Examples included:
It’s really important that employers implement National Minimum Wage policies. It is also vital that checks are made throughout each tax year and certainly more frequently than just when the rates change in April each year.
Being named and shamed is causing reputational damage as well as discouraging potential employees from seeking employment with such organisations. If you have any concerns about your organisation not correctly paying the appropriate National Minimum Wage, we highly recommend that you seek professional advice. Correction of errors proactively and before HMRC might otherwise carry out an inspection affords significant advantages in terms or penalty and public naming.
If you would like a review of your processes and controls, please get in touch with your main Crowe contact or a member of the Employers Advisory Group.
HMRC ramps up furlough enforcement as the scheme winds down
Employment tax compliance obligations