The law firm Pinsent Masons has revealed a freedom of information request they submitted to HM Revenue and Customs (HMRC) shows the number of minimum wage underpayment complaints increased to 5,053 in the year to April 2017. This is more than double the number of complaints made in the previous year, where 2,513 complaints were made.
HMRC is responsible for enforcing minimum wage rules, from carrying out investigations into underpayment complaints to fining organisations who failed to comply with minimum wage legislation. HMRC investigated over 2,600 organisations in the year to April 2017, uncovering underpayments for over 98,000 workers totalling £10.9 million. Workers can now submit an underpayment complaint to HMRC through an online form, making it easier than ever to blow the whistle on their employer’s failure to comply with the law.
Organisations who fail to pay staff correctly can face significant penalties for doing so. Not only will they have to repay the underpayments to workers, organisations can also be subjected to a penalty fine of up to 200 per cent of the arrears capped at £20,000 per worker. The director for the Labour Market Enforcement, the body responsible for co-ordinating the activities of HMRC and other governmental bodies, has previously called for fines to be increased to “five times” the wage arrears to punish organisations.
Alongside financial penalties, organisations may also be publicly named and shamed for their underpayment. The naming and shaming initiative has publicised organisations from Primark to Argos for failing to pay the legal minimum to their workers. This scheme carries a high reputational risk for organisations, especially due to the current focus on worker rights and culture.
Rules around minimum wage payments are complex, with common excuses for underpaying workers including failing to pay for travel time and deducting uniform costs. Concerns regarding underpayments of workers continue, with the government particularly concerned with the exploitation of workers in organisations with complex supply structures, and those within the beauty and care sectors. Organisations will need to increase their awareness of minimum wage laws to avoid having the whistle blown on them. This becomes even more important when minimum wages go up in April 2018 as a failure to pay staff correctly due to an ignorance of the new rates will not be excused.