Uniform costs and overtime rates blamed as 260 employers break minimum wage rules

Primark and Sports Direct named among underpayers, as CIPD warns businesses to be ready for next hike in rates

More than 260 employers in the UK have been named and shamed by the government for underpaying employees the national minimum wage and national living wage, ahead of a nationwide rise in the level of both announced for April 2018 in last month’s budget.

A record 16,000 workers will be reimbursed £1.7m after being underpaid. The most common reasons for underpaying were identified as deducting money from pay for uniforms, not paying for overtime and failing to pay workers travelling between jobs.

“Large employers with HR teams should not be making these basic errors,” Ben Willmott, head of public policy at the CIPD, told People Management. “Examples such as non-payment of overtime should not happen in any organisation, and big organisations have no excuse at all for getting this wrong. It should be the responsibility of HR and business leaders to make sure they are complying with the legal requirements, as an absolute minimum.”

Retail groups topped the 2017 list of employers fined for underpaying their workers, followed by hospitality and hairdressing. Sports Direct and The Best Connection Group – which supplies workers to Sports Direct warehouses – were among the top five underpaying companies.

Steve Turner, assistant general secretary of union Unite, criticised the government for its inability to provide employee protections, and its failure to reimburse Sports Direct workers their pay after the issue was first raised in a parliamentary enquiry in July 2016: “Scandalously, some long-serving agency workers at Sports Direct are still owed a portion of their back pay, raising serious questions about how serious government ministers are about enforcement.

“The government needs to sort it out and make Sports Direct take full responsibility. With insecure and precarious work on the rise, the figures released by the government are just the tip of the iceberg, with bad bosses ripping workers off in the shadows away from the public glare.”

Discount fashion retailer Primark was the single largest culprit, paying almost 10,000 staff below the national minimum wage because of a uniform policy that required employees to wear black clothes at work but did not reimburse them for the cost of their uniforms. The firm has since repaid 9,735 underpaid staff a total of £231,973 and been hit with an undisclosed fine.

Under the National Minimum Wage Regulations 2015, deductions made for a uniform that an employer requires an employee to wear must be taken into account when it comes to calculating the minimum wage. This is also the case for certain other benefits, but not for accommodation (up to an allowable limit).

A spokesperson for Primark, which is owned by Associated British Foods, said its uniform policy changed last year and that it "had reviewed its procedures to avoid this situation re-occurring".

Following the 2017 autumn budget, the Low Pay Commission recommended that the national living wage be increased from £7.50 to £7.83 for workers aged 25 and over, with 21 to 24-year-olds seeing their minimum pay rise from £7.05 to £7.38. Younger workers and apprentices will also benefit from increases to their pay, with the new wage bands coming into effect from April 2018. 

“All employers should be aware of the next hike in wages, and how the government will work with employers and professional bodies to make sure the information is widely available so there really is no excuse for getting this wrong in the future,” Willmott said.

“It’s equally important to ensure there is support for smaller employers that are getting this wrong through a lack of capacity or capability, to be sure they understand their obligations.”