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The Department for Business and Trade (DBT) has named and shamed over 200 employers who have failed to provide their lowest paid staff the national minimum wage (NMW) in a list published on 21 June 2023.
The clear message that is being communicated is that no company is absolved from its duty to pay its workforce properly.
Myerson’s team of specialist employment lawyers previously explored the common pitfalls in this area for employers, which result in what are often unintentional breaches of NMW laws.
Our previous blog discusses the national minimum wage naming scheme.
Indeed, the DBT conceded that “not all minimum wage underpayments are intentional”.
However, they emphasised that the zero-tolerance approach extended to breaches that are inadvertent in an unambiguous statement that “there is no excuse for underpaying workers”.
Which companies were named for NMW underpayment?
Amongst the 202 employers listed were several household names, including the following:
- WH Smith Retail Holdings Limited, who failed to pay £1,017,693.36 to 17,607 workers;
- Lloyds Pharmacy Limited, who failed to pay £903,307.47 to 7,916 workers;
- Marks and Spencer P.L.C., who failed to pay £578,390.79 to 5,363 workers; and
- Argos Limited, who failed to pay £480,093.58 to 10,399 workers.
Read the full DBT list of companies to see all the employers named for NMW underpayment.
The breaches in the list occurred between 2013 and 2019, with HMRC concluding its investigations between 2017 and 2019.
The employers named are understood to have underpaid their workers in the following ways:
- 39% of employers deducted pay from workers’ wages. WH Smith, who topped the list, attributed this failure to its uniform policy, where it failed to provide black trousers or skirts and shoes to its employees, resulting in a shortfall in wages.
- 39% of employers failed to pay workers correctly for their working time.
- 21% of employers paid the incorrect apprenticeship rate.
Marks and Spencer attributed its inclusion on the list to an “unintentional technical issue from over four years ago”.
The giant claimed that temporary staff were not paid within the required periods, and the error was rectified as soon as the company became aware.
WH Smith said its underpayments were caused by misinterpreting how minimum wage rules applied to its staff uniform policy; an issue said to have been faced by other employers such as Lloyds Pharmacy.
Argos, the owner of Sainsbury’s, defended the latter’s inclusion on the DBT list by explaining that its underpayments of wages related to an error discovered in 2018, dated back to 2012, before its acquisition of the business.
The publishing of this list serves as a stark reminder of the consequences for employers who fail to pay their staff properly and in accordance with the law.
In addition to reputational damage, those exposed on the list have been ordered to repay their workers and face penalties amounting to nearly £7 million following the breaches.
What should employers be doing to ensure compliance?
Employers should seek legal advice to ensure compliance with up-to-date NMW legislation to avoid such penalties and humiliation.
Since 1 April 2023, the various NMW rates are as follows:
|
Age: |
Current Rate: |
|
National Living Wage |
£10.42 |
|
21-22 Year Old Rate |
£10.18 |
|
18-20 Year Old Rate |
£7.49 |
|
16-17 Year Old Rate |
£5.28 |
|
Apprentice Rate |
£5.28 |
|
Accommodation Offset |
£9.10 |
Employers must keep accurate pay records and ensure they are accessible to any employees that request them.
Employers should be reviewing their wage rates to ensure compliance is maintained when NMW rates increase each April.
If any underpayments are discovered, these should be rectified as soon as possible (even in the case of ex-employees), or the employer could see themselves facing employment tribunal claims or complaints being lodged with HMRC.