Best way to avoid minimum wage 'naming and shaming' is to identify and self-correct

The misplaced perception that enforcement of the NMW only affects small and unscrupulous employers is beginning to change.

The companies have not set-out to pay below NMW but have fallen foul of one of the many technicalities within the NMW rules being applied by HMRC. 

By far the best way to manage any potential enquiry and underpayment is to identify it before HMRC takes action. Where an employer identifies that it might have fallen foul of one of the many pitfalls and self-corrects those errors then HMRC has advised that it will not raise the Notice of Underpayment, and that the penalty and naming that that normally follows will not be sought.

A list of "offenders" was published by Department for Energy and Industry Strategy (BEIS) earlier this year and it contained many major household names in the retail and consumer sector. One company failed to pay NMW to the tune of £1.4 million and a penalty of a further £800,000 was levied on it.

The company was caught out as employees had been required to attend briefings before their shifts started, for which they were not paid, as well as security searches at the end of their shifts.  Other areas where employers have fallen foul are instances of workwear being paid for by the employees themselves; age related payments; and apprentice rates.

Companies have received national press coverage for the breach, and despite their attempts to explain the failure, the headlines are likely to be most unwelcome. 

Failure to apply NMW is a strict liability offence, if caught getting it wrong by over £100 the employer is automatically in line for a penalty of 200% of any underpayment, and the company will appear on the published name and shame list.

John Hardman is a tax investigations expert at Pinsent Masons, the law firm behind Out-Law.com