'Naming and Shaming' of Employers Who Fail to Comply with National Minimum Wage Rules Resumes
We previously detailed the increases to the National Minimum Wage (NMW) rates from 6 April 2021. It is important that employers identify the workers affected by such increases in order to avoid breaches of the NMW legal framework.
Failure to pay workers the NMW can lead to employers being faced with a fine capped at £10,000 per worker, along with (in the most serious cases) being publically shamed by the Government.
On 31 December 2020, the Department for Business, Energy and Industrial Strategy (BEIS) issued a press release which detailed a list of 139 employers including household names like Tesco, Superdrug, Pizza Hut and Costco who were 'named and shamed' for failing to pay minimum wage to their workers. The 139 employers collectively failed to pay a total of £6.7 million to over 95,000 workers between September 2016 and July 2018.
The employers were required to pay affected workers arrears of wages and were subject to financial penalties.
In many cases, breaches of the minimum wages rules are not intentional. However, employers who are found to be underpaying workers will be required to pay arrears of wages to those workers along with financial penalties of up to 200% of the arrears (capped at £10,000 per worker), which are payable to the Government.
The risk of breaching minimum wage rules will be higher where low-paid workers are required to cover work-related costs, such as paying for uniform, training or parking fees. Additionally, employers can slip up where they fail to increase a workers' pay following a birthday which moves them into a new national minimum wage bracket.
In order to ensure compliance with the national minimum wage framework, we recommend that employers audit their workers' pay, particularly the lowest paid and ensure they account for the increases applicable from 6 April 2021.
National Minimum & Living Wage Increase - What Employers Need to Know