The rates of pay set by the National Living Wage and National Minimum Wage increased on 1 April 2022. Those employers that flout the National Minimum Wage laws risk more than just being forced to repay underpayments.

There are significant fines, and HMRC is now naming, shaming and, in some cases, holding these companies up to ridicule.

Breaching National Minimum Wage laws 

During the 2020/21 tax year, the number of workers HMRC helped to reclaim lost earnings rose to over 155,000 across the UK. HMRC recovered more than £16 million in pay that was due to them and issued more than £14 million in penalties. Although not all National Minimum Wage underpayments are intentional, it has always been the responsibility of all employers to abide by the law.

Name and shame 

Last year HMRC took the step of ‘naming and shaming’ 191 employers that had broken National Minimum Wage laws between 2011 and 2018.
Following investigations by HMRC, the named firms had to repay £2.1 million to over 34,000 workers and were fined an additional £3.2 million.
The employers named by the government fell foul of the following National Minimum Wage laws:

  • 47% wrongly deducted pay from workers’ wages, including for uniforms and expenses
  • 30% failed to pay workers for all the time they had worked, such as when they worked overtime
  • 19% paid the incorrect apprenticeship rate.Poor excuses 

    In addition to naming and shaming offenders, HMRC has revealed some of the most ‘absurd’ excuses given by employers for not paying their employees the National Minimum Wage.

    Five such ‘ridiculous’ excuses for flouting the law were:

  1. ‘She does not deserve the National Minimum Wage because she only makes the tea and sweeps the floors.’
  2. ‘The employee was not a good worker, so I did not think they deserved to be paid the National Minimum Wage.’
  3. ‘My Finance and I speak a different language – he does not understand me, and that is why he does not pay my workers the correct wages.’
  4. ‘My employee is still learning so they are not entitled to the National Minimum Wage.’
  5. ‘It is part of UK culture not to pay young workers for the first three months as they have to prove their ‘worth’ first.’The National Living Wage and the National Minimum Wage 

    A worker or employee aged 23 or over and not in the first year of an apprenticeship is legally entitled to the National Living Wage.

    Despite its name, this rate is essentially a National Minimum Wage for the over 22s. The government is committed to increasing this every year.

    The National Living Wage and National Minimum Wage rates change on 1 April each year. Employers will need to make sure they are paying their staff correctly as both the National Living Wage and National Minimum Wage are strongly enforced.

    The table below shows the National Minimum Wage and National Living Wage rates applying from 1 April 2022:

Apprentices*16 & 17-year-olds18 – 20-year-olds21 & 22 year olds23 and over
National Min Wage£4.81£4.81£6.83£9.18
National Living Wage£9.50