National Minimum Wage Underpayments

Employers who failed to pay the National Minimum Wage have been ‘named and shamed’ by the Government Department for Business Innovation and Skills (BIS).This will be an annual occurrence whereby businesses that have failed to pay the NMW will be issued with a Notice of Underpayment (NoU) and then have 28 days to appeal. If no appeal is made or if the employer loses the appeal, then the BIS will potentially name them publicly.We’ve seen the Top 25 List for this year & you can too if you go looking for it as it was published by most news groups; we’re not convinced it is reasonable to those employers so we haven’t included a link to it.

Yes of course employers should pay their staff the NMW, but assuming that that everyone on the list has now put right any underpayments, and been fined, and that if any of these cases went through an employment tribunal for underpayment of wages they are already public knowledge, what is the benefit to this ‘naming and shaming exercise’?

Unfortunately there are many situations that don’t fit the government’s nice neat boxes, categories and definitions, and there are times when calculating whether NMW applies is actually not as straightforward as it sounds.

Is it reasonable to be named and shamed for getting something wrong to the tune of an underpayment of just £134.35 as the business at number 25 on this list did? Is it fair to a business reputation to be called a “payment dodger” in the news when we have no idea of the circumstances that led to the underpayment?

We’re aware that National Minimum Wage underpayments led to over £4 million in arrears being paid to over 22,000 workers last year and that fines totalled over £800,000, so we’re not saying this is a problem that should be ignored – we’re just not entirely comfortable with the naming and shaming policy.