The government has published the names of 389 employers caught underpaying their staff below the national minimum wage – and the list should serve as a sharp warning to every small business owner who assumes the rules are straightforward.
The firms collectively failed to pay 60,000 workers a total of £7.3 million. Financial penalties imposed by HMRC amounted to £12.6 million, with fines of up to 200 per cent of the underpayment, capped at £20,000 per worker. Among the names are household brands including Costa, KPMG and Bupa Care Services, but the list also includes dozens of smaller operators, the kind of businesses that may not have a dedicated payroll or HR function and where errors creep in without anyone noticing.
That is the uncomfortable truth about minimum wage compliance: most breaches are not deliberate. They happen when a uniform deduction accidentally drags an hourly rate below the threshold. They happen when unpaid working time, travel between sites, mandatory training, cashing up after a shift, is not properly accounted for. They happen when rates change in April and payroll is not updated quickly enough.
The timing of this latest naming round matters. It is the final publication before the Fair Work Agency, a new enforcement body created under the Employment Rights Act, begins its work on 7 April. The agency will consolidate the enforcement powers currently spread across HMRC, the Gangmasters and Labour Abuse Authority and the Employment Agency Standards Inspectorate, creating a single body with broader reach and, the government hopes, sharper teeth.
For small employers, that means the compliance landscape is about to become more joined-up. Where previously a small firm might have fallen through the gaps between different enforcement bodies, the Fair Work Agency is designed to close those gaps.
The national living wage itself rises in April, from £12.21 to £12.71 an hour for workers aged 21 and over, equivalent to an annual full-time salary of roughly £24,785. Rates for younger workers and apprentices are also increasing. Any business that has not already updated its pay scales is running a risk that grows with every week of delay.
Employment lawyers advise small firms to conduct a minimum wage audit at least annually, and always when rates change. That means checking not just the headline hourly rate but also whether any deductions, salary sacrifice arrangements or unpaid working time could bring the effective rate below the legal floor. It is a tedious exercise, but considerably less costly than a £20,000 fine and having your business name published on a government website.
The reputational damage of being named may, for many small businesses, matter even more than the financial penalty. Customers, prospective employees and suppliers all notice. In a world where a quick search can surface a naming-and-shaming list, the stain is not easily washed off.
