A record 360 businesses have been named and shamed by the government for failing to pay over 15,500 workers the correct National Minimum Wage (NMW) or National Living Wage (NLW).

The employers were required to pay back almost £1 million in underpayments and were issued with penalty fines of nearly £800,000.

Most well-known is Debenhams, which after an “accounting error” paid its staff below the legal minimum, so will repay £134,000 to more than 11,000 staff and pay a £63,000 fine. Other well-known names include Subway, Lloyds Pharmacy and Peacock Stores.

HMRC’s targets

The government previously announced the intention of HMRC to focus on sectors that are prolific for underpayments, with employers in hairdressing, hospitality and retail being the largest offenders.

229 employers each underpaid just one of their respective employees, showing that no case is too small for an HMRC investigation.

The government introduced naming and shaming as a deterrent in 2013. This latest record-breaking list of shamed businesses shows that employers still get this tricky area of law wrong.

Employer excuses

Excuses submitted to HMRC for underpaying staff included administrative errors, using tips to top up pay, making reductions for Christmas parties, and requiring staff to pay for work uniforms.

But there is no excuse for failing to pay individuals the correct minimum wage. Alongside damaging a business’s reputation, HMRC issues significant fines.

Large fines

Since 2016, the maximum penalty for underpayment is 200% of the arrears owed, up to a maximum of £20,000 per worker (reduced by 50% if paid within 14 days).

For most companies, making good the underpayment and paying the penalty fine is a substantial financial cost.

Over the next year, the government will spend over £25 million on minimum wage enforcement. Expect the next list of shamed employers to be much, much longer.

Think your business is at risk? Need to know more about the National Minimum and Living Wages? Call our team of experts today for peace of mind.