The National Minimum Wage and Underpayment

The minimum wage was introduced to protect low-paid workers and is updated every year. Employers who fail to pay the minimum wage can face legal action, fines and negative publicity. Avoid these consequences and follow our action plan.

The National Minimum Wage increases each October. This year, the rates have increased as follows:

£6.50 for workers aged 21 and over

£5.13 for workers aged between 18-20 years.

£3.79 for workers aged between 16-17 years.

£2.73 for apprentices under 19 (or 19 and over who are in the first year of their apprenticeship).

Inspections

It is entirely possible that HMRC compliance officers may arrive at employers’ premises to carry out inspections of pay records at any time. They do not have to give any reason for such an inspection.

Inspections may result from complaints about non-payment of the minimum wage; those complaints may come from employees or third parties. HMRC also carries out targeted enforcement of known low-paying sectors.

Naming and Shaming

It is important to bear in mind that since October 2013, the government has revised its method of publicising the names of employers who have failed to pay the minimum wage.

All employers that have been issued with a Notice of Underpayment will be named unless they meet one of the exceptional criteria or have arrears of £100 or less.

If an employer receives a Notice of Underpayment (which sets out the wages owed, together with the penalty for non-compliance), they have the right to appeal against it.

If the employer fails to appeal or their appeal is unsuccessful, they will be considered for naming. The employer then has 14 days to show the Department that they meet any of the following exceptional criteria:

• naming could cause risk of personal harm to an individual or their family or

• naming could cause national security risks, or

• there are other factors to suggest that it would not be in the public interest to name the employer or company.

Employers who try to use the public interest criterion should be aware that this will apply only in very exceptional cases.

The Department will normally inform the employer of the outcome within 14 days of receipt of any representation made by the employer.

If no representations are made to the Department, or if the representations made are unsuccessful, the employer will be named via a press release.

It is advisable that all employers should pro-actively review the hourly rates they pay to ensure that they do not find themselves being reported, thus running the risk of being named and shamed.

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