Employers named and shamed in NMW scandal

As part of employment law provisions in the UK, all workers and employees over compulsory school age, including apprentices, are entitled to earn at least the National Minimum Wage (NMW) or the National Living Wage (NLW) for every hour worked. The rates at which these should be paid change yearly and vary depending on the individual’s age.

By law, it is important that employers pay staff the correct minimum wage rates for their age groups or risk facing serious repercussions for failing to do so. The risks of failing to pay the correct minimum wage rates range from unlawful deductions from wages claims, fines from the Government, and/or being “named and shamed” as a “rogue” employer.

The Government has relaunched the naming and shaming scheme after a two-year pause (to allow for an evaluation into its effectiveness to be carried out) which carry more stringent penalties on offending employers. Business Minister, Paul Scully, has described the recently published list of 139 organisations who failed to pay their staff the appropriate minimum wage rates for their age groups as a wake-up call to “rogue” employers.

After an investigation spanning between 2016 and 2018, it has now come to public knowledge that a total of £6.7 million was left unpaid to over 95,000 employees by both large and small organisations across the UK. According to the Government, this offence occurred for a number of reasons, including that low-paid staff were obligated to cover costs of their work uniforms, training, or parking, as well as employers failing to raise staff pay once they are eligible for a higher wage bracket – e.g. a 20-turned-21-year-old who became eligible for a higher rate of minimum wage was still being paid at the lower rate.

Offending employers have been required to make, and have completed making, outstanding wage payments to staff based on current minimum wage rates rather than those in place at that time of the underpayment, as well as fines of 200% of the unpaid amount to the Government at a cap of £10,000 per employee.  

Reminder: change is coming

To avoid any penalties and/or time-consuming (and expensive) tribunal claims, employers should keep in mind that there will be some very crucial changes to the minimum wage set-up from 1st April 2021. NMW rates will be increasing and the age threshold for the NLW will be lowered to cover 23-year-olds and above.

The table below shows the current minimum wage rates and the changes from 1st April 2021:

Age

Current rates

Rates from 1st April 2021

Workers aged 25 and over (NLW)

£8.72 an hour

-

Workers aged 23 and over (NLW)

-

£8.91 an hour

Workers aged 21-24

£8.20 an hour

-

Workers aged 21-22

-

£8.36 an hour

Development rate for workers aged 18-20

£6.45 an hour

£6.56 an hour

Young workers rate for workers aged 16-17

£4.55 an hour

£4.62 an hour

Apprentices under 19, or 19+ but in the first year of the apprenticeship

£4.15 an hour

£4.30 an hour

Takeaway

It may be easy for the law to be misconstrued when it comes to minimum wage, especially as it changes on a yearly basis. However, it important that employers keep in mind that the onus remains on them to ensure that they are keeping in line with the law, as made clear by the Government.

Suggested Resources