Employers blame overtime, apprentices and uniforms for almost £2m in underpaid wages

17 Aug 2017 By Hayley Kirton

Retailers, hospitality businesses and hairdressers among worst offenders

Deducting pay to cover uniforms, paying the wrong wage to apprentices and failing to account for overtime were among the most common excuses given by employers newly identified as underpaying staff.

The Department for Business, Energy and Industrial Strategy (BEIS) discovered that 233 companies had failed to pay more than 13,000 staff the national minimum wage (NMW) or national living wage (NLW), amounting to a total shortfall just shy of £2m.

Argos topped the list of businesses identified in this most recent round of naming and shaming, owing just under £1.5m to workers. Retailers, hospitality businesses and hairdressers were among the companies most likely to have incorrectly paid staff.

“It is against the law to pay workers less than legal minimum wage rates, short-changing ordinary working people and undercutting honest employers,” said business minister Margot James. “[This] naming round identifies a record £2m of back pay for workers and sends the clear message to employers that the government will come down hard on those who break the law.”

Frances O’Grady, general secretary of the Trades Union Congress, said: “The minimum wage has been around for nearly 20 years. There is no excuse for employers to claim ignorance, or to blame problems on admin errors.”

Not only will the staff concerned have their underpaid wages made up to them, the government has also fined the companies named a total of £1.9m.

“HMRC is committed to getting money back into the pockets of underpaid workers, and continues to crack down on employers that ignore the law,” said Melissa Tatton, director at HMRC. “Those not paying workers the NMW or NLW can expect to face the consequences."

Argos chief executive John Rogers said the underpaid wages were brought to his company’s attention as part of a routine HMRC visit shortly after the retailer was bought by Sainsbury’s.

“Sainsbury’s prides itself on being a trusted brand where people love to work and I was, therefore, very disappointed to hear this and launched an immediate investigation,” Rogers added. “I am pleased to say the issue was resolved quickly and processes have been updated to ensure this cannot happen again.”

The issue is understood to predate the Sainsbury’s acquisition last September and to have been linked to the timing of staff briefings and security searches.

The government revamped its naming and shaming scheme for employers that fail to pay the required minimum wage in October 2013. Since then, it has identified £6m of backpay due to 40,000 people and fined 1,200 businesses £4m. Other household names to be caught out by the scheme include Debenhams, which topped the name-and-shame list published in February.

HMRC is currently investigating around 2,000 cases of underpaid wages. The release of this most recent list – the 12th round of naming and shaming to be published – comes shortly after Sir David Metcalf, director of labour market enforcement, published his introductory report, which vowed to crack down on rogue employers.

Meanwhile, data published last month by BEIS revealed that one in five apprentices did not receive their mandatory minimum wage in 2016. At present, apprentices are entitled to £3.50 per hour if they are under 19 or in the first year of their apprenticeship. After this, they should be paid the rate of NMW for their age group.

The NLW, which applies to those aged 25 and over, is currently £7.50.

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