Last week, the government announced the names of almost 200 businesses which had breached national minimum wage (NMW) law between 2011 and 2018.
Following investigations by Her Majesty’s Revenue and Customs, a total of £2.1 million was found to be owed to more than 34,000 workers. Named employers (including household companies such as John Lewis and the Body Shop) have since paid what they owed, plus an additional £3.2 million in fines.
The reasons for the failure to pay the correct rate varied. For instance, almost half the employers named (47 per cent) ended up on the list because they had wrongly made deductions from workers’ wages, including for uniform and expenses.
Almost a third (30 per cent) had failed to pay workers for all the time they had worked, such as when they worked overtime, while just under a fifth (19 per cent) had paid the wrong apprenticeship rate.
Other situations in which workers are at risk of being underpaid include:
- not being paid for all time worked, for example time spent at team handover meetings between shifts, or passing through security checks on entry and exit
- being over-charged for living accommodation provided by the employer; and
- tips from customers being used to meet minimum wage pay.
While not all minimum wage underpayments are intentional, getting it right is the employer’s responsibility. Employers who pay workers less than the minimum wage have to pay wage arrears to the worker at current minimum wage rates and they also face financial penalties - paid to the government - of up to 200 per cent of arrears (capped at £20,000 per worker). Since 2015, employers have been ordered to repay more than £100 million to one million workers.
From 1 April 2021, the hourly NMW rates are:
- 23 and over - £8.91
- 21 to 22 - £8.36
- 18 to 20 - £6.56
- 16 to 17 - £4.62
- Apprentices - £4.30
In order to check the correct rate, workers can visit this site.
Guidance for employers is available here.