Low Pay Commission report on non-compliance with the minimum wage

A report released from the Low Pay Commission (‘LPC’) that published findings on National Minimum Wage (‘NMW’) non-compliance and enforcement suggests that up to 1 in 5 minimum wage workers may be underpaid.

Underpayment of wages is most prevalent immediately following the uprating of the NMW demonstrating a strong seasonal pattern to underpayment, which suggests that employers are slow to adapt to the change in rates. The report shows that women make up two thirds of employees underpaid and the childcare industry are the worst offenders of failing to pay the NMW within which 34% of low paid workers received less than they were entitled to in 2016.

 The LPC are in favour of HMRC’s regular regime of ‘naming and shaming’ of companies who are underpaying their workforce. The LPC also praise the Government for their proactive approach to tackling NMW enquiries, especially the introduction of self-correction whereby, if an underpayment has been found, the employer must identify whether the rest of their workforce have been underpaid for a period. Self-correction accounted for £6 million in arrears in 2016/17. Self-corrected arrears do not attract penalties, therefore employers that use self-correction would avoid the penalties which have been increased to up to 200% of arrears, capped at £20,000 per worker.

To read the full report, click here.

Aspire Comment

If you are concerned about your compliance with the NMW then please contact Aspire to discuss how we can help identify any risk areas within your company.

Alternatively, if you have had a HMRC NMW enquiry or a self-review request then contact us to discuss how we can assist managing this process for you.