The government produces a ‘naming and shaming’ list as part of their enforcement scheme against employers who breach minimum wage laws. The latest list, published 9 March 2018, reveals 179 organisations have been identified as failing to pay staff correctly with wage arrears totalling nearly £1.1 million owed to over 9,200 workers.
In addition to being ‘named and shamed’, organisations who have underpaid staff are required to make good the underpayment. They can also face a penalty fine of up to 200 per cent of the arrears, capped at £20,000 per worker. The government has announced the organisations on the list have been fined a total of £1.3 million.
The most common sectors for underpaying staff included hospitality, hairdressing and retail. The restaurant Wagamama were the largest offenders as they were found to have underpaid 2,630 staff a total of £133,212. Wagamama have since explained they misunderstood the rules relating to minimum wage and uniform costs.
The list of under payers has been released a little over three weeks before the increases to minimum wage rates takes effect. From 1 April 2018, workers aged 25 and over are entitled to be paid at least £7.83 an hour as the National Living Wage rises by 4.4 per cent (previously set at £7.50 an hour). All other National Minimum Wage rates will also increase from this date, with workers on the apprentice rate receiving a record 5.7 per cent wage increase.
Before these new rates take effect, organisations need to ensure they are aware of the increases and understand how to apply these correctly. Proactive steps may need to be taken, such as reviewing current hourly pay to assess whether pay increases are necessary and checking if payroll systems are programmed to apply the new rates automatically.
The statistics show workers are becoming more aware of their pay rights and the ability to ‘blow the whistle’ on their employer. Complaints made to HMRC regarding underpayments more than doubled in the year up to April 2017, compared to the previous year. This makes it more likely alleged underpayments are being investigated and enforcement action, including being publicly named, can be carried out against organisations.
Identifying wage underpayments will also become easier from next April as new rights are introduced following the government’s response to the Taylor Review. From 6 April 2019, all workers will have the right to receive an itemised payslip setting out how they’ve been paid. From the same date, all payslips provided to workers and employees will need to state the total number of hours worked where pay differs depending on working hours. Alongside helping workers understand their pay, the increased transparency and documentation will help enforcement bodies assess whether minimum wage is being paid.