National Minimum Wage - naming and shaming by HMRC
10 August 2021
On 5 August 2021, the Department for Business, Energy and Industrial Strategy (BEIS) published the latest list of 191 employers “named and shamed” for underpaying National Minimum Wage to over 34,000 workers.
The list includes underpayments up to and including 2018 and with many enquiries ongoing, we can expect to see other organisations named and shamed in the future. Even good employers, can be caught out by the complexities of the rules and the risks apply to all organisations, including private businesses, public sector and charities.
Underpaying National Minimum Wage (NMW) not only impacts employees but also affects employers, not just in terms of costs associated with having to repay underpayments and penalties (of up to 200%), but also from a reputational risk perspective as evidenced by the latest list of organisations identified as underpaying NMW to the employees, which includes some high profile names.
What can your organisation do to help ensure that it is not falling foul of NMW regulations?
NMW rates are increasing year on year and recent changes mean that from April 2021, 23-year-olds are now entitled to receive National Living Wage, (previously the age limit was 25). However, it is not merely hourly rates that come under scrutiny, from HMRC.
There are a number of additional risk areas, that employers need to consider including “technical pitfalls” from uniform requirements to salary sacrifice arrangements and arriving five minutes early to work to set up, that mean employers can be inadvertently underpaying NMW. Recognising that not all NMW underpayments are intentional, HMRC can sometimes be persuaded to take a more lenient approach but only where employers demonstrate that they are actively trying to improve their compliance.
The best way to improve your compliance with NMW is to undertake an external review. We have helped many clients through HMRC NMW reviews and would encourage clients to be proactive and consider NMW now. This helps ensure that organisations are compliant and do not face underpayments and penalties.
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