Hundreds more employers have been publically ‘named and shamed’ by the Government for failing to pay their workers the national minimum wage. Quarter on quarter, the number of employers continues to grow and we are able to recognise trends in who is getting it wrong most frequently, and why. With hefty fines attached to underpayment, employers need a firm grasp on how the law works on minimum wages.

13,000 Workers Underpaid

In August, 233 employers had their names and locations published on the internet, along with details on the underpayments that HMRC had identified. The details show us how many employees were underpaid and how much the employer’s total underpayment was.

In total, more than 13,000 workers had been underpaid to the tune of more than £1.9 million.

This brings the overall total of identified underpayments, since October 2013, to £6 million. Where an underpayment is found, the employer will also be fined. In that same time period, fines have reached £4 million.

The Government continues to take enforcement of the national minimum wage very seriously. Recently appointed Director of Labour Market Enforcement, David Metcalf, will oversee future measures to ensure compliance with the law.

Retail Employers Top The Charts

August’s figures show that Argos was the highest underpaying employer with 12,000 workers underpaid by almost £1.5 million. This obviously makes up a large chunk of the total number of workers affected as shown in August’s figures as well as the total underpayment. However, a pattern appears to be emerging of well-known high street retailers falling foul of the complicated rules around how pay is apportioned and what value it has when performing the necessary calculations to ensure wages do not fall below the legal minimum.

Earlier this year, Debenhams topped the list of named and shamed employers when it underpaid 11,000 workers by £134,000. Fashion retailer Monsoon has also fallen foul.

Where Are They Going Wrong?

When a large retail employer makes an error in relation to paying the minimum wage, it is almost inevitable that they will rise to the top of the ‘underpayers’ list due to the sheer number of employees they employ. Debenhams blamed an accounting error when they appeared on the list – even a small anomaly per each employee will result in a huge total underpayment.

However, the practices undertaken by the large employers which have created the underpayment will resonate with smaller employers in all industries, for example:

  • Charging employees for their uniform. Deductions to wages for the benefit of the employer will reduce a worker’s national minimum wage pay;
  • Not correctly accounting for overtime hours. All hours of work over the pay reference period will attract minimum wage;
  • Requiring employees to stay after their contracted hours for bag searches. Again, these hours may well be deemed as ‘work’.

The Low Pay Commission, which carries our research on behalf of the Government on minimum wage issues, notes in its recent report that non-compliance with the minimum wage is highest in the three months after the rates are increased.

Importantly, rates are no longer increased in October. The next rate review will take place in April 2018.

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