The Government recently announced that 191 companies failed to pay £2.1 million to over 34,000 workers, owed for minimum wages. Those companies were all named and shamed under the Naming Scheme. This scheme was previously paused in 2018 to evaluate its effectiveness, resuming in February 2020.
Some of the more prominent organisations named on 5 August 2021 include John Lewis, Body Shop International, Pret A Manger and Sheffield United Football Club. They were all instructed to repay what was owed and fined an additional £3.2 million.
It is important to recognise that some of these minimum wage underpayments were not intentional. Sometimes, the breach happens when deductions are made, despite workers being paid the minimum wage or above.
The latest list shows that underpayments were made in the following ways:
- 47% incorrectly deducted workers’ pay for uniform, expenses and other reasons
- 30% failed to pay for all hours worked, such as when working overtime
- 19% paid the incorrect apprenticeship rate.
The Consequences of Paying Less than the Minimum Wage
Since 2015, the Government has ordered employers to repay over £100 million to one million workers. Additionally, arrears to the worker must be repaid at the current minimum wage rates. Employers also face financial penalties of up to 200% of the arrears, capped at £20,000 per worker, to be paid to the Government.
The most serious cases of non-compliance, where employers falsify their records or refuse to answer questions, can be criminally prosecuted and face a potential penalty of an unlimited fine.
Business Minister Paul Scully said: “Our minimum wage laws are there to ensure a fair day’s work gets a fair day’s pay – it is unacceptable for any company to come up short. This Government will continue to protect workers’ rights vigilantly, and employers that short-change workers won’t get off lightly.”
Current Minimum Wage Rates
Minimum wage law changes yearly. Most recently, in April 2021, the age threshold for the National Living Wage was lowered from 25 to 23 and the National Minimum Wage rates were increased, rising from £8.72 to £8.91 per hour. The current rates are:
- Workers aged 23 and over – £8.91 an hour
- Workers aged 21-22 – £8.36 an hour
- Development rates for workers aged 18-20 – £6.56 an hour
- Young workers rates for workers aged 16-17 – £4.62 an hour
- Apprentices under 19, or over 19 and in the first year of apprenticeship – £4.30 an hour.
It’s important to note that it is always your responsibility as an employer to ensure that you are abiding by the law for paying the minimum wage and all other employment issues. By doing so, you avoid the possibility of fines and tribunal claims for unlawful deductions from wages.
If you need any help or advice on minimum wage payments or any other HR queries, do call me on 0118 940 3032 or click here to email me.