Employers ‘named and shamed’ for failing to pay minimum wage

But experts warn lack of resource could cause ‘inadvertent’ breaches as government publishes list of firms that collectively underpaid more than £6m

More than 100 companies, including some of the UK’s biggest household names, have been named and shamed by the government for failing to pay workers the minimum wage.

The government investigated claims of failure to pay the national minimum wage (NMW) between 2016 and 2018, and discovered the 139 named firms failed to pay £6.7m to more than 95,000 workers in total.

Among those named was restaurant chain Pizza Hut, which failed to pay 10,980 workers the NMW, totalling approximately £845,936.

St Johnstone Football Club owed £14,266.74 to 28 workers, 25 of whom were apprentice footballers. A spokesman for the Scottish Premiership club told the BBC the underpayments were related to voluntary deductions from pay and that changes had been implemented following a review of apprentices’ working hours.

Other firms on the list include Superdrug, Müller UK & Ireland Group, Costco Wholesale UK and Tesco, which failed to pay £5,096,946 to 78,199 workers, although the supermarket told the BBC the underpayment was a result of a technical fault and that it had reported the issue to HMRC itself.

This is the first time the government has published the names of companies for failing to pay the NMW since 2018, following changes that mean this will be done more frequently, but only the worst offenders will be targeted.

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The naming scheme had been paused so that an evaluation of its effectiveness could be carried out; however, the government announced on 11 February 2020 that the scheme would resume.

HMRC, which led the investigation, said preserving and enforcing workers’ rights was a “priority for this government”, and the publication of the list was intended to serve as a warning to “rogue employers that the government will take action against those who fail to pay their employees properly”. 

Business minister Paul Scully said it was never acceptable for any employer to “short change” their workers, but it was “especially disappointing” to see household names that “absolutely should know better” on the list. 

“This should serve as a wake-up call to named employers and a reminder to everyone of the importance of paying workers what they are legally entitled to,” Scully said. “Make no mistake, those that fail to follow minimum wage rules will be caught out and made to pay up.”

The companies the government has named today were served a notice of underpayment between September 2016 and July 2018.

Charles Cotton, senior policy adviser at the CIPD, said it was right that employers deliberately flouting the law on paying minimum wage were fined for doing so. However, he said these regulations can be complex and some employers might break this law inadvertently because of lack of resource or expertise.

“For this reason, it is important that there is enough government support, especially for micro and small firms, so that employers are aware of what they need to do and how to do it,” Cotton advised.

The government said one of the main causes of NMW breaches was low-paid workers being made to cover work costs such as paying for uniforms, training or parking – which would eat into their pay packet and dip it below minimum wage.

Additionally, some employers failed to raise employees’ pay after they had a birthday that should have moved them into a different NMW pay bracket.

Employers that breach NMW legislation have to pay back arrears of wages to the worker at current minimum wage rates. The firms also face hefty financial penalties of up to 200 per cent of arrears – capped at £10,000 per worker – which are paid to the government. 

Each of the 139 companies named by HMRC have paid back their workers and were forced to pay financial penalties.

Bryan Sanderson, chair of the Low Pay Commission, said there can be no excuses for non-compliance with the minimum wage rates as the annual changes are well publicised six months in advance following a well-understood process. “Those affected are among the most needy and vulnerable in our country – the companies concerned should be deeply ashamed of their performance,” he said.

In November, the government announced a measured increase in national living wage and NMW rates, which will come into effect from April 2021. Chancellor Rishi Sunak said the government would be accepting the advice of the Low Pay Commission by increasing the national living wage by 2.2 per cent to £8.91 per hour, as well as extending eligibility to those over the age of 23. The NMW will also rise.

Suank said the minimum wage increases would likely benefit around two million people, and that a full-time worker on the national living wage would see their annual earnings increase by £345 next year.