HR NEWS | Underpaying National Minimum Wage Fines

HR NEWS | Underpaying National Minimum Wage Fines

Almost 240 employers have been named and shamed by the government for underpaying the National Living and Minimum Wage.

Employers have underpaid 22,400 workers by £1.44m and have been fined a record £1.97 million!

Since this system of naming and shaming employers was introduced over five years ago, over 1,900 employers have been fined a total of £8.4m!

What are the current National Minimum Wage rates?

As of April 2018, the National Living Wage (the rate for those who are 25 or over) is £7.83 per hour.

The National Minimum Wage applies for those aged under 25 and the hourly rates are as follows:

  • £7.38 for those between 21 to 24 year olds
  • £5.90 for between 18 to 20 year olds
  • £4.20 for 16 and 17 year olds
  • £3.70 for apprentices.

Why are employers getting into trouble?

The government highlighted that the top five reasons for underpayments were as follows:

  • taking deductions from wages for costs such as uniforms
  • underpaying apprentices
  • failing to pay travel time
  • misusing the accommodation offset
  • using the wrong time periods for calculating pay

Who fell foul of the law?

Employers in retail, hospitality and social care have all featured on the list.

Sportswift Limited, which trades as Card Factory, was the biggest offender. It failed to pay over £430,000 to over 10,000 workers. They were followed by T.J. Morris Limited, which trades as Home Bargains, who underpaid £272,228.44 to over 6,700 workers.

Final thoughts

This is one list that all employers want to avoid. Employers are required to pay back the arrears of wages to the worker and they will have to pay a financial penalty which is up to 200% of arrears and can go up to £20,000 per worker. Additionally, an employer may have claims made against them for unlawful deductions from wages or breach of contract.

To avoid fines, reputational damage and claims, employers need to keep on track of their minimum wage obligations. If you need any support, contact your Employment Law Adviser who can guide you.

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