Previously introduced in 2018, organisations who were found to have not paid staff at least the minimum wage were included on a list released quarterly by the Department for Business, Energy and Industrial Strategy (BEIS). The aim was to improve upon existing enforcement methods for payment of the wage, with organisations on the list potentially suffering significant reputational damage as a result. That said, the scheme received criticism at the time, with the claims that organisations were being placed on the list for ‘honest mistakes’. Therefore, the scheme was paused in late 2018 to carry out a review into its effectiveness. However, the government has now confirmed that it is to return.
Subject to Parliamentary approval, from April 2020 organisations who fail to provide the minimum wage will once again be listed, however the threshold for being included on this list is to increase. Whilst previously those who owed arrears of at least £100 were noted, they instead now need to owe at least £500. Speaking on the change, a spokesman for BEIS noted that ‘this new, proportional approach will mean that some businesses falling foul of the rules… will not be named, provided they correct any errors’. BEIS goes on to confirm that although organisations in this position can avoid being included on the list, they will still have to pay back the arrears and face potential fines as a result.
Alongside the reintroduction of this scheme, the government is updating rules surrounding the underpayment of the minimum wage to take mitigating factors into account. For example, organisations that offer salary sacrifice schemes will now no longer face financial penalties if pay falls below the minimum wage as a result. This is likely in response to high-profile incidents such as Middlesbrough FC, who were accused of taking staff earnings below the legal minimum through an agreement to deduct wages for season tickets.
Additionally, workers who are paid daily or hourly can be classed as salaried workers, with further changes expected to help organisations avoid being accidently caught out. These include:
- allowing additional payment cycles for salaried workers
- permitting organisations to choose the appropriate ‘calculation year’ to help them monitor hours worked by salaried workers
- ensuring salaried workers are able to receive ‘premium pay’ without losing their entitlement to equal and regular instalments.
Although it is hoped that this new scheme will make it easier for organisations to avoid being unfairly penalised, it should still be remembered that it remains unlawful to deliberately not pay the national minimum wage. Failure in this regard can result in a penalty of up to 200 per cent of the amount owed to each worker.