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Large Increases in the Number of Workers Receiving Back Pay for Minimum Wage Arrears

on Friday, 18 May 2018.

The government has published new figures this week in respect of pay owed to employees as a result of employers failing to pay the National Minimum Wage.

National Minimum Wage

The National Minimum Wage increased again on 1 April 2018, from £7.05 per hour to £7.38 per hour. The National Living Wage (for workers 25 and over) increased from £7.50 to £7.83.

The Department for Business, Energy and Industrial Strategy (BEIS) works in tandem with HM Revenue and Customs to enforce the National Minimum Wage.

BEIS have been granted the power to 'name and shame' companies which are not adhering to the National Minimum Wage on a public list which is posted to the Government's website. HMRC can issue fines to companies in breach of up to 200% of the wage arrears, with an overall maximum penalty of £20,000 per employee. If employers refuse to pay the fine, they can face directorship bans of up to 15 years and potentially criminal sanctions.

Back Pay

The figures published this week show a large increase in claims against employers for back pay, despite the sanctions employers could face for failing to pay the National Minimum Wage.

The figures show £15.6 million owed to over 200,000 workers for the tax year 2017-8. A similar investigation for the year 2016-7 identified £10.9 million as owing to 98,000 workers.

HMRC has connected this increase with its new complaints service, the introduction of which has seen a 132% increase in the number of complaints and minimum wage arrears identified. The government has also launched a scheme in conjunction with this service to encourage workers who are potentially owed back pay to contact HMRC or ACAS.

Risk Areas

The government has been strict in the enforcement of the National Minimum Wage against employers. There are a number of areas where employers may inadvertently fall foul of National Minimum Wage requirements:

  • making deductions from wages - employers who take deductions from employees' wages for deposits or payments for equipment, including uniforms, may be in breach of the National Minimum Wage
  • failing to identify working time
    • training inside or outside the workplace approved by the employer should be treated as working time
    • 'on call'/standby time and 'sleep in' shifts - this may amount to working time

Best Practice

If your company employs employees at, or just above, the National Minimum Wage, it is very important to ensure that you are administering their wages properly, particularly in reference to the risk areas highlighted above. Failure to comply with the National Minimum Wage could result in fines and penalties, including naming and shaming.


For more information, contact Charlotte Rose in our Employment Law team on 0117 314 5219.

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