Skip to main content

Support for North West employers to demystify National Minimum Wage regulations as ‘naming and shaming’ list published

As the Government recently released its ‘naming and shaming’ list of employers who have breached National Minimum Wage (NMW) regulations, RSM is advising businesses how to avoid inadvertently falling foul of the rules.

The list highlighted employers who have failed to comply with the regulations from 2017 to 2019, with 202 employers named, and underpayments totalling almost £5 million. Employers appearing on the list include several major high street brands, as well as smaller businesses and sole traders.

Kevin Duffy, regional managing partner for RSM North West said: 

‘This list includes 26 businesses in the North West, and as HMRC has a NMW team based in Manchester, and is still proactively auditing employers in this region, there will be more investigations to come. The complexities of NMW compliance impacts all sectors, so we’re advising employers to be proactive and work with their advisors now to ensure they are fully compliant.’

RSM recommends employers take the following steps to ensure their name doesn’t end up on the list.

  • Ensure the business understands the correct NMW categorisation from all employment contracts, as this will form the basis of how the NMW is calculated
  • Ensure that the business understands working patterns across the workforce know what counts as “working time” for NMW purposes
  • Review whether deductions taken from pay will reduce pay for NMW purposes, regardless of whether this deduction is at the employee’s own request
  • Speak to your tax advisor if you are unsure of how the NMW rules apply to your business.

Julie Moore, tax partner, RSM Manchester added:

‘Whilst it is now more widely understood that breaches of the National Minimum Wage are commonly due to technicalities, rather than a deliberate intention to underpay workers, the headlines that go with the publication of the list could be reputationally damaging to employers and cause disruption in their workforce. Employers who find themselves on the naming and shaming list often have an influx of employees querying whether they are entitled to any repayment, or whether the cause of the breach has been rectified. Where an employer has minimal or unclear communications with their workforce around the breaches, or hasn’t introduced and communicated any improved processes to mitigate further breaches, there is a risk than an employee could reach out to ACAS and/or HMRC to query how their pay is calculated. This would likely result in a further NMW investigation by HMRC, a process which is time consuming and disruptive to the business.’

The Government’s list of non-compliance states the breaches are for the following reasons:

  • 39% of employers deducted pay from workers’ wages
  • 39% of employers failed to pay workers correctly for their working time
  • 21% of employers paid the incorrect apprenticeship rate

The Government states ‘whilst not all minimum wage underpayments are intentional, there is no excuse for underpaying workers’ demonstrating HMRC intends to continue undertaking compliance reviews to ensure that workers are taking home the correct pay.