HMRC Naming and Shaming Non Compliance to Rise in National Minimum Wage

HMRC Naming and Shaming Non Compliance to Rise in National Minimum Wage

 In light of the recent increase to the National Minimum Wage, HM Revenue and Customs have published a list of more than 100 businesses who have failed to pay their employees a sufficient amount. The ‘name and shame’ scheme forms part of HMRC’s wider policy on tackling employers who break or disregard the law, and provides clear evidence that compliance checks are being carried out.

The adult rate for the National Minimum Wage rose to £6.70 per hour on 1 October 2015, marking an hourly increase of 20p. Rates for younger workers also increased, following recommendations made by the Low Pay Commission, while the Government opted for a 20% increase in the rate for apprentices. In total, the various NMW changes are believed to have affected more than 1.4 million workers across the United Kingdom.

Employers are legally obligated to be aware of the current rate of National Minimum Wage for each of their workers and to pay accordingly. Failure to comply is illegal and employers caught will have to pay back arrears at the current rate, and may face further penalty charges of up to £20,000. In the most serious cases, non-compliance with minimum wage legislation can result in a business facing criminal prosecution.

At present, the rates for the National Minimum Wage are as follows:

  • Adult Rate (21 +) – £6.70 per hour
  • 18 to 20 year olds – £5.30 per hour
  • 16 to 17 year olds – £3.87 per hour
  • Apprentice Rate – £3.30 per hour

“Employers that fail to pay the minimum wage hurt the living standards of the lowest paid and their families,” says Nick Boles, the current Business Minister. “As a one nation government, on the side of working people, we are determined that everyone who is entitled to the National Minimum Wage receives it.”

BIS Scheme

The system of naming and shaming businesses who fail to pay the NMW was introduced by the Department for Business, Innovation & Skills at the start of 2011, and was revised by the coalition government in October 2013. This revision removed many of the publication restrictions, allowing HMRC to name and shame more employers. It is hoped that the negative press of being named and shamed will provide a deterrent effect.

Some of the more notable names published by HMRC last month include a large retail company based in London, who owe more than £104,000 to 1,438 workers, and a non for profit organisation, based in Washington, who owe more than £27,000 to six employees. In total, 113 companies were named, including businesses in the education, social care, retail, catering and hairdressing sectors.

All 113 of the companies named in the latest press release had failed to pay the NMW and has arrears in excess of £100 at the time of publication. Employers who are issued with a Notice of Underpayment (NoU) have 28 days to appeal against the notice before they are named publicly. So far, since the scheme was revised in 2013, almost 400 businesses have been named and shamed, resulting in total financial penalties of more than £500,000.

For any advice around these issues please contact MCC Accountants!




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