Could you be another of the 239 companies named, shamed and fined for failing to pay the National Minimum Wage? A recent report has highlighted that a total of £1.44 million was underpaid to over 22,000 workers and businesses were fined a total of £1.97 million by HM Revenue and Customs.

Amongst the offending under-payers were big names such as Card Factory, UCI Cinema Group and Wyevale Garden Centres; organisations that will have large HR departments and who frankly should know better. Card Factory, was the biggest offender, failing to pay over £430,000 to over 10,000 workers.

We have previously discussed the pay failings of Sports Direct who were also brought to book for not including the time that employees had to queue for staff searches when calculating hours worked. The extra 15 minutes or so that staff had to wait when leaving their workplace effectively bought their hourly rate below the legal minimum.

It seems that it is failure to take into account added costs and miscalculations of working hours that are the most common reasons for not paying the minimum wage. The government listed the top five reasons for underpayment as:

• 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

The uniform trap is an easy one to fall into. Remember that if you instruct your staff to wear a particular garment for work, this amounts to uniform and an allowance should be made for it. Waiting staff in a restaurant for example who must wear black jeans may have to spend £30 or £40 to comply. If they are already on minimum wage, this added cost for them will effectively bring their pay under the threshold as HMRC will treat it as a deduction from pay.

Even if you supply uniform, you could still get caught out as employees will normally be expected to launder it themselves for which there will be costs. These costs should be accounted for, or an allowance made.

Financial penalties for paying less than the minimum wage can be up to double the amount owed, capped at £20,000 per worker. However it’s reputational damage that may be the greatest cost as employers who are seen to flaunt employment legislation will find it harder to recruit good quality staff in the future and may even see some customers vote with their feet.

We know that the payroll is usually an employer’s biggest cost so we understand that keeping the wage bill down is a challenge faced by many. There is no excuse however for failing to keep to your legal obligations on pay so it’s important to remain vigilant of potential pitfalls if you have employees who are on or close to the National Minimum Wage.

If you need some support and advice with this topic or if you feel a HR audit might be a good idea, just give us a call on 01452 331331 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it.