The Fair Work Agency in the Department for Business, Innovation, Science and Trade recently announced that nearly 660 employers had been named for failing to pay the NMW, with approximately £4 million of underpaid wages being repaid to over 27,000 workers and penalties of around £7 million issued.
Preet Bahia , senior manager in the Workforce Advisory team in Crowe’s Oldbury office, said: “Many businesses assume they are compliant because employees are paid above the hourly NMW rate.
“In our experience, underpayments often arise unintentionally due to the complexity of the rules.”
According to Crowe, some of the common issues of underpayments include unpaid working time before or after shifts, deductions from pay that reduce NMW pay, incorrect treatment of apprentices, failure to capture all working hours accurately, and incorrect classification of workers and errors in calculating NMW pay.
The Government has also reiterated its commitment to increasing enforcement activity through the Fair Work Agency.
Bahia said: “Importantly, NMW compliance is assessed on a pay period-by-pay period basis and HMRC can require employers to repay arrears at current NMW rates, which can significantly increase the cost of historic underpayments.
“As recent enforcement activity demonstrates, reputational damage can be just as significant as the financial cost.
“At Crowe, we support businesses with tailored National Minimum Wage reviews designed to identify and quantify potential risks before HMRC does.
“Businesses with large workforces, employees paid close to NMW levels, shift-based workers, apprentices, retail, hospitality, care, leisure and similar sectors may be particularly exposed.”
For more information, contact preet.bahia@crowe.co.uk, or call 0121 543 1900.
