Spike in minimum wage underpayment among 20-24 year olds

According to a minimum wage underpayment report for 2020-21 released by the Department for Business, Energy and Industrial Strategy (BEIS) a number of employers failed to increase staff pay when 23-year-olds were brought into the scope of the national living wage. HM Revenue & Customs (HMRC) have identified £16.8m in national minimum pay arrears for more than 155,000 workers in the 2020/21 financial year. It has issued 575 penalties totalling £14.1m to non-compliant employers, and one person was prosecuted.

It found a small spike in underpayment of employees aged 20-24 years old, which BEIS says demonstrated that “some underpayment may have arisen from an employer’s failure to uplift their employees pay in line with the change in age band to bring 23-year-olds into scope of the NLW”.

The average arrears per case of underpayment was more than £6,000 in 2020/21 and the average arrears per worker was £108. The arrears per worker figure has increased slightly compared to the previous year, partly due to HMRC taking account of non-compliance across an employer’s whole business, rather than just the individual worker who complained.

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