Businesses failing to pay the National Minimum Wage
According to Government figures, in 2017-18, HMRC recorded 1,016 instances of companies failing to comply with the NLW and NMW, issuing financial penalties of more than £14m in the process and identifying £15.6m in pay owed to more than 200,000 workers. This is a significant increase from the total £3.9m financial penalty for underpaying more than 98,000 workers in 2016-17, and the £1.8m penalty for underpaying more than 58,000 workers in 2015-16.
Despite increases in HMRC resource in this area, leading to an increase in wages recovered and financial penalties levied, the likelihood of HMRC identifying companies for breaching the NLW/NMW is still as low as 13%. While HMRC identified 1,456 companies as failing to pay the NLW/NMW in 2018-19, the actual estimated number of employers that failed to pay in this period is estimated to be closer to 11,000.
Errors in calculating pay often arise from employers including sums that cannot be counted towards the NLW/NMW, such as shift premiums or overtime premiums. Equally, issues frequently arise from deductions from wages, even where these are seen as voluntary or beneficial for workers.