HMRC published its latest “name and shame” list (Round 19 Bulletin) on 21 June 2023, naming over 200 business for failing to fully pay their workers National Minimum Wage (NMW). The employers named range from some of the biggest names on the high street to small businesses. Upon review of HMRC’s Round 19 Bulletin, it is evident that these underpayments of NMW derive from three main areas of concern:
- Deductions from workers’ wages;
- Failure to pay workers for working time; and
- Paying incorrect apprenticeship rates.
Over the last five years, we have seen a surge in NMW enforcement, particularly in relation to deductions made from workers’ wages when it comes to various benefits or salary sacrifice schemes (such as Christmas savings clubs). HMRC’s Round 19 Bulletin reveals that the deductions from worker pay involve a range of issues, including deductions for food/meals, travel costs, training costs (as well as the usual salary sacrifice schemes and uniform issues). Employers have also been caught out for failing to pay their workers for additional working time, including work carried out before and after a worker’s shift, unpaid travel time and even for rounding clock-in time to the nearest hour.
The latest list provides an insight into the key concerns HMRC has encountered when it comes to NMW enforcement. Whilst this round of employers has fallen foul of the typical NMW pitfalls of salary sacrifice schemes, it is apparent that HMRC is taking a firm line when it comes to failures to pay. This is particularly the case when it comes to unpaid working time, as employers must take steps to ensure ALL working time is captured. Simply relying on a worker’s rota or clock-in times may not be enough. As a result, employers need to be more proactive in putting the correct procedures in place, ensuring NMW pay rates are updated annually and being vigilant with record keeping. In addition to being named, employers face the risk of lengthy HMRC investigations into their businesses, as well as financial penalties of up to 200% of the monies owed. Therefore, undertaking internal reviews of working practices is imperative, prior to HMRC commencing its own investigation or conducting worker interviews. Correcting any problems before a HMRC intervention can help employers avoid both the financial penalties and the reputational risk of being named and shamed.