To encourage companies to pay the legal minimum wage to their employees, HMRC has employed the tactic of public shaming. Basically if you don’t, you’ll have to endure the negative publicity of appearing on HMRC’s ‘naming list’ of those who’ve been found guilty of underpaying their staff.

HMRC investigations into failure to pay minimum wage

HMRC investigated these 141 companies between 2011 and 2018. All of them were found to be in breach of minimum wage law, have repaid missing wages and paid a fine to the government. 34,000 taxpayers missed out on a combined total of £2.1million during this time. That’s not money going into the Treasury, that’s legitimate salary not being paid into employees’ bank accounts. Unacceptable in any circumstances.

There is an update system which moves procedures on at a brisker pace. Now, employers only have 28 days to pay up or appeal their charge. Then their names go straight to the Department for Business, Energy and Industrial Strategy for inclusion on this public list.

Previously, names only went on the list once the entire process was complete. Including appeals, this could take months or, in some cases, years. That’s why this list goes back so far. This doesn’t mean that non-compliant employers weren’t sued for their underpayments, it means that this wasn’t public knowledge until the matter was fully resolved.

Are they all deliberate attempts to underpay staff?

The details of each case aren’t published. But HMRC lists some statistics as a breakdown of how these underpayments happened:

  • 47% incorrectly took money out of staff wages, for things like uniform, accommodation and expenses
  • 30% hadn’t paid people for the entire time they’d worked, like overtime hours
  • 19% paid the wrong Apprenticeship rate

In their press release, HMRC reminds every employer that: “Every single UK worker is entitled to the National Minimum Wage, no matter their age or profession.” It’s also pointed out that Minimum Wage rules apply to all UK countries.

They acknowledge that: “Whilst not all minimum wage underpayments are intentional, it has always been the responsibility of all employers to abide by the law.”

The punishment for not paying legal wages is:

  • Repay arrears back to each employee at today’s minimum wage rates.
  • Pay a fine of up to 200% of the underpayment total to the government. This is capped at £20,000 per employee

The total fine paid by all the companies as a result of these investigations is £3.2 million.

Who hasn’t been paying their people properly?

All 191 companies are listed, with both owner and company names where necessary. It’s an eclectic mix of businesses from across most industries. Football clubs, hairdressers, children’s nurseries, restaurants, nightclubs and car dealerships are just a few of the business types that have been highlighted. Alongside other, better known companies like The Body Shop, Welcome Break and Martin McColl.

The headline grabber is always the most well-known high street name. On this list, that’s John Lewis. They owed a total of £941,355.67 to 19,392 employees. That’s £48.54 each.

And they’re not happy about being included in this public shaming. A spokesperson told AccountingWeb: “This was a technical breach that happened four years ago, has been fixed and which we ourselves made public at the time. The issue arose because the partnership smooths pay so that partners with variable pay get the same amount each month, helping them to budget. Our average minimum hourly pay has never been below the national minimum wage and is currently 15% above it.”

But one Waverley, agricultural support company called Burningfold Ltd owed one employee £9,916.36. Think how much difference that amount makes to your regular wage. This is the highest figure owed to one employee. The rest range from under £100, to several thousand.

Given that we’re talking about taxpayers earning the lowest wages, it’s really inexcusable that any employer tries to pay them even less than the legal requirement. Any reduction in salary is liable to tip the balance of their budget into dangerous territory.

HMRC have produced a public spreadsheet that details the amount of underpayment and number of employees affected for each company, along with the usual business details.

Will the public naming and shaming continue?

HMRC has come back to using this public naming of companies who fail to pay either their employees or their taxes, after a short break. They feel that it’s a successful deterrent against repeat offences and as a general warning. So we can expect it to carry on. It is, undoubtedly, embarrassing negative publicity. The best companies can do is just acknowledge their error and explain how it won’t happen again. Sometimes it’s been because of genuine mistakes. But it’s on businesses to ensure that their pay practices are legal.

Business Minister Paul Scully said:

“Our minimum wage laws are there to ensure a fair day’s work gets a fair day’s pay – it is unacceptable for any company to come up short. All employers, including those on this list, need to pay workers properly.This government will continue to protect workers’ rights vigilantly, and employers that short-change workers won’t get off lightly.”