HMRC receives more funding to crack down on companies flouting NMW rules

According to the Government’s latest Labour Market Enforcement Strategy report, HM Revenue & Customs (HMRC) is to receive an additional £5.3 million of funding in 2017/18 to ensure businesses are paying employees the National Minimum Wage (NMW) and National Living Wage (NLW).

This follows on from a previous increase of £20 million in 2016, which has allowed the team to expand to more than 360 members of staff.

The funding boost comes as the latest list of UK employers who have failed to pay their workers the National Minimum Wage, has been published, revealing that a record number of fines, totalling £1.9 million, has been handed down.

In addition to the fines, employers will need to pay more than 13,000 employees around £2 million in back pay.

The review has named and shamed 233 employers who have failed to pay staff their full wages.

High Street catalogue retailer Argos has emerged as the worst offender. The company, which was bought by supermarket giant Sainsbury’s last year, had failed to pay 12,176 workers the correct amount, with a shortfall close to £1.5 million.

The error was linked to staff briefings which were conducted before they had clocked on to their shifts as well as security searches after workers had clocked off. The company has confirmed that all staff have now received their back pay.

Business minister Margot James said: “It is against the law to pay workers less than legal minimum wage rates, short-changing ordinary working people and undercutting honest employers.

“Today’s naming round identifies a record £2 million of back pay for workers and sends the clear message to employers that the Government will come down hard on those who break the law.

“Common errors made by employers in this round included deducting money from pay packets to pay for uniforms, failure to account for overtime hours, and wrongly paying apprentice rates to workers.”

Since 2013, the Government has fined 1,200 employers around £4 million and forced them to pay out £6 million to staff.

Currently HMRC enforces non-compliance with the statutory wage legislation by:

  • Ordering wage arrears to be paid to the worker
  • Imposing civil penalties of up to 200 per cent of the arrears owed per worker up to £20,000
  • Naming and shaming employers who owe their workers over £100
  • Undertaking and ordering labour market enforcement
  • Conducting criminal investigation possibly resulting in a prosecutions

Depending on the severity of the case, employers can face one or all of the penalties listed above, so it pays to ensure that a business is compliant with the current NMW and NLW requirements.

For help and advice on national minimum wage compliance and how Moore Thompson can support your clients with a wide range of issues relating to payroll, please contact us.