EY comments on the release of the latest list of businesses to have paid below the National Minimum Wage
Ian Thomas, Associate Partner in EY’s People Advisory Services team, comments on the release of the latest list of businesses to have paid below the National Minimum Wage.
The latest list of businesses to have paid below National Minimum Wage (NMW) was issued last Friday. Whilst smaller than previous lists, it comes only four months after 400 businesses were named in August, possibly indicating an increase in frequency of publication. Any employers issued with a Notice of Underpayment are at risk and should be ready to react to any negative publicity.
HMRC NMW resources have doubled in the last three years to over £25 million, the majority of which is to “fund new teams to proactively review complex employers”. Not surprisingly, HMRC is concentrating its resources on larger companies in targeted sectors, offering higher recoveries.
Criticisms refer to “businesses that break the rules”, “short changing workers” but the fact is that a large proportion of the issues identified are very technical in nature and as the legislation is so complex, many companies may find themselves inadvertently falling foul of the law.
Typically, NMW enforcement and compliance have targeted the retail, hospitality and hairdressing sectors and some businesses are complacent about the fact that they will not be targeted by HMRC’s NMW teams. We have noted that within the past 12 months, a significant change in enforcement activity is taking place and other sectors such as manufacturing, professional, educating and other non- low paying sectors are now being investigated.
Increased use of intelligence by HMRC and an increased focus on interviewing current and former workers means that investigations can be extremely time and resource consuming. Businesses must have confidence that they are NMW compliant if they are to avoid the financial and reputational consequences of breaching NMW.