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empty wallet | accountingweb | minimum wage

Employers named for failing to pay minimum wage


Hundreds of companies – including some well-known brands – have been named for not paying minimum wage. However, BDO has stressed that many “may well have acted with the best intentions” but made “inadvertent mistakes”.

21st Feb 2024
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The likes of EasyJet, Currys and River Island are among the more than 500 companies that have been named by the government for not paying minimum wage. However, a senior figure at BDO has stressed that many “may well have acted with the best intentions” but made “inadvertent mistakes” when calculating pay.

The 524 employers were found to have failed to pay their workers nearly £16m, according to the government, who said the breach left more than 172,000 workers out of pocket.

Those named have since paid back what they owe to their staff and have also faced financial penalties of up to 200% of their underpayment.

Deliberate and accidental

However, Caroline Harwood, employer tax partner at BDO, noted that while it’s “always a bit of a shock to see so many well-known names” appearing on the list, the data “doesn’t differentiate between breaches that are deliberate and those which are accidental”.

“Many employers on the list may well have acted with the best intentions but made inadvertent mistakes when calculating workers’ pay,” she added. “Common areas that can lead to underpayments are things like deductions from pay linked to salary sacrifice schemes, uniforms or other voluntary deductions.

“Employers can also fall foul by failing to have robust time-monitoring processes in place.”

Common downfalls

Samantha O’Sullivan, policy and advisory lead at the Chartered Institute of Payroll Professionals (CIPP), said the most common downfalls to the “complex area of legislation” take place in the form of “deductions from pay, for things like uniforms, and unpaid working time”.

“For example, if workers must pass through a security check as part of their job, this should be paid as working time,” she said.

The CIPP recently facilitated several think tank events for its members, where HMRC officials provided an update on the educational programmes the agency has created to support employers in meeting their national minimum wage and national living wage obligations.

“CIPP members raised concerns about the ongoing impact of national minimum wage increases on salary sacrifice arrangements, particularly with pension contributions,” said O’Sullivan.

Rates increase

“In the coming increase to rates, many are concerned that workers previously eligible to have their pension contributions taken through salary sacrifice will no longer be able to and therefore lose the national insurance savings that come with that.”

O’Sullivan added that while increases to the national minimum and living wages “can only be a good thing for workers”, the CIPP noted that employers will feel an “added burden” come April 2024, with national minimum wage rates increasing on average by 16%. Employers are obliged by law to pay this rate of pay to their workers, with no ongoing support from the government.

Replies (17)

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By GHarr497688
21st Feb 2024 15:56

Another witch hunt by HMRC when millions more will just carry on paying what they want. System too complicated and broken to fix.

Thanks (7)
Replying to GHarr497688:
By paul.benny
22nd Feb 2024 12:13

So you think that enforcement of legislation to protect the lowest paid workers is a witch hunt?

NMW is very simple: pay at least the rate specified.

But some employers introduce their own complications (eg pension via salary sacrifice). And others penny-pinch by seeking only to count the time an employee is at their workstation, even though there are required activities before they can start work.

Thanks (1)
Replying to paul.benny:
By GHarr497688
23rd Feb 2024 19:02

I didn't say that at all and that is not what I meant. Yes I agree with the minimum wage however listing the names of 500 people won't act as a deterrent to the masses. Education is the way forward not the shameful approach.

Thanks (0)
By Roland195
21st Feb 2024 16:50

Why can HMRC not muster this enthusiasm when dealing with the other matters within their remit?

Thanks (4)
By FactChecker
21st Feb 2024 20:10

"The 524 employers were found to have failed to pay their workers nearly £16m, according to the government, who said the breach left more than 172,000 workers out of pocket" ... so a few pennies more than £93/employee on average. Sure it matters, but is materiality even considered when making the decision to monitor/police/prosecute/collect (against the scale of other issues)?

And I bet that the senior figure at BDO was nervous whilst stressing that many “may well have acted with the best intentions” but made “inadvertent mistakes” when calculating pay.
A lot of these 'named & shamed' employers will have paid loads of money to the big consultancies to review their policies and advise them how to be compliant ... so it's arguably a worse reflection on those consultancies than on the actual employers.

Thanks (9)
By JustAnotherUser
22nd Feb 2024 08:42

the devil is in the details here
from 569 companies named.... (headline should be charged and named)
101 if them were in relation to just 1 employee
231 upto 5 and 291 upto 10

largest payment back to an employee was £33,869
average payment back to single employees was £2,549
average to those with over 100 employees was £92
less than 100 was £1092
between 1 and 100 was £610
average if you remove single employees was £479

why so many negative comments, keep these companies on thier toes and they also faced financial penalties of up to 200%, this part annoys me... why is it 'upto' please just state how many penalties and how much total was generated by this exercise.

24 of the companies are in liquidation and owe 229k, average £963
8 are in administration and owe 461k , average £334
7 were PLCs owe 1.4m average £289

Thanks (3)
By Duggimon
22nd Feb 2024 09:56

There are no accidental breaches, there are careless breaches and there are deliberate breaches, but nobody paying workers minimum wage is unaware they are doing so and really ought to know if you pay people minimum wage you can't deduct anything from that.

I'm not some kind of savant but I know well enough that you need to pay people for the time they spend doing the tasks you mandate them to do as part of their job and that there is a minimum amount you have to pay them for that time, and that you can't take any of it back.

Virtually all of these breaches are either entirely deliberate or a failure to either understand or apply the above quite simple sentence, absolutely no sympathy for any of these people and if they weren't trying to get away with paying everyone not just low wages but the absolute lowest possible, it wouldn't happen so much.

Thanks (8)
Replying to Duggimon:
By Mature Student
22nd Feb 2024 11:16

100%, especially the last paragraph. It seems to be a case of pay as little as we can get away with, on the premise we won't get caught if we do breach nmw and even if we do, they can only go so far back. Which it seems is cheaper than paying a reasonable wage in the first place for all staff.

I belive Cabin crew, for example, are only 'on the clock' from when the airplane doors close!

Thanks (0)
Replying to Duggimon:
By Roland195
22nd Feb 2024 14:26

I disagree. There almost definitely are accidental breaches included within this, based on a very strict interpretation of legislation and that HMRC have absolutely gone out of their way to find - things like Xmas clubs, employee purchases.

I doubt there is a case in the whole list where an employer actually pays employees at a rate this than the NMW as in hours on a payslip.

To be fair, I reserve my sympathy for the small employers being caught out for highly technical breaches in rules - I have no issue with the bigger companies being brought to book for their shenanigans with employee's time - security clearance etc and spurious uniform requirements.

Thanks (0)
By listerramjet
22nd Feb 2024 10:20

Has anyone published research on what the minimum pay legislation has actually cost us?

Thanks (0)
Replying to listerramjet:
By paul.benny
22nd Feb 2024 11:49

Do you mean (payroll) cost to employers, compliance costs, enforcement cost, cost (or benefit) to the economy?

If you mean the last of these, try

I'm sure there are dozens more studies for both UK and other countries.

Thanks (0)
By AndrewV12
22nd Feb 2024 11:10

BDO has stressed that many “may well have acted with the best intentions” but made “inadvertent mistakes”.

Really, I bet they don't make inadvertent over payments. I think BDO are trying to defend the un-defensible.

Thanks (0)
Replying to AndrewV12:
By Duggimon
22nd Feb 2024 12:02

BDOs stance might be more understandable if we knew how many of the named and shamed companies are BDO clients.

Thanks (2)
Replying to AndrewV12:
By nig24
22nd Feb 2024 12:04

Some things are beyond defending, but some of the underpayments on that list are so small they could be rounding errors.
Marstons for example underpaid 1,672 employees over a 50 month period. This totalled an average of £2.35 per employee, or around 5 pence per employee per month.

Thanks (2)
By Yossarian
22nd Feb 2024 14:02

A former client once fell foul of NMW legislation, but in their particular case I did feel sorry for them. They were a travel company and allowed one of their employees to buy a holiday at around a 50% discount and pay for it in instalments out of their monthly pay. A NMW inspection found that once the holiday repayments had been deducted, the remaining wage was below the minimum. The company was fined, named and shamed, and whilst they accepted they had technically broken the rules I can't help but feel this wasn't in the spirit of what minimum wage legislation was intended to achieve!

Thanks (2)
Replying to Yossarian:
By FactChecker
22nd Feb 2024 14:38

Indeed ... although there's a lot of (understandable) emotion voiced in earlier comments - they sometimes stray into making definitive statements that are hard if not impossible to verify.

I take it as a given that we need legislation to protect workers from deliberate exploitation, but the rules have become so complex that a 'considerable number' (in the words of HMRC) of those found guilty were (again in their words) guilty of a 'technical breach'.

I followed this up with them, seeking clarification, and was told that:
A technical breach is of course still a breach; but we use that phrase where we believe it is obvious that the breach was neither the intention of the pay policies nor a result of careless operation in the application of that policy.

For I guess obvious reasons they were not willing to be drawn into giving specific examples ... but anyone who has had the misfortune to attend those interminable seminars on the subject run by the big consultancies will know they're not so shy!
As a simple example, if you pay anyone a fixed monthly salary for a fixed number of hours per weekday ... you may find that a breach occurs in a month that happens to have a higher proportion of those working-hours than usual - even though the rate across the year is above the minimum level.

There's a wholly different argument to be had about the morality of paying people at the very minimum that you can get away with ... but (aside of the sweat shops who should be but rarely are caught up in the policing) that tends to be a factor of competitive pressures within specific sectors.
Tackling that would be very worthwhile, but has nothing to do with the 'naming & shaming' under discussion here.

Thanks (4)
By accountaholic
26th Feb 2024 13:05

Businesses should pay above the NMW, no problem with that.

What gets me about this "name and shame" list is the historic nature of some of the cases. A breach nine years ago may have been fixed and reimbursed years ago, and then appears on a 2024 published list. I question what that does for anyone. Would you say, not buy from a company, or not go to work for them, because they underpaid someone nine years ago? I'd want to know if the business had sorted their procedures since.

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