John Lewis one of nearly 200 companies to pay staff less than the minimum wage

The UK government has named and shamed companies 200 companies which have underpaid their workers, totalling £1.2 million to over 34,000 people.

Companies such as The Body Shop, Enterprise Rent-A-Car and Pret A Manger were all found to be underpaying staff, with 47% of employers wrongly deducting pay from workers’ wages, including for uniform and expenses, and 19% paying the incorrect apprenticeship rate.

Over a quarter (30%) failed to pay workers for all the time they had worked, mainly due to overtime. 

All breaches of paying below national minimum wage took place between 2011 and 2018 and companies were fined £3.2 million collectively.

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Business minister Paul Scully said minimum wage laws were in place to ensure a fair day’s work gets a fair day’s pay.

He said: “All employers, including those on this list, need to pay workers properly.

“This government will continue to protect workers’ rights vigilantly, and employers that short-change workers won’t get off lightly.”

Stephen Bevan, head of HR research development at the Institute of Employment Studies, said HR’s role should be to ensure no employee is being paid less than minimum wage, as the consequences could be dire for the business as a whole as well as the individual.

He told HR magazine: “After a decade of historically low real wage growth in the UK and in-work poverty remaining a problem for too many, it is essential that employers meet their obligations under the minimum wage legislation.

“This is not an area where HR professionals can afford to be asleep at the wheel because errors risk employers being liable to big fines and reputational damage.”

Bevan also said errors in employee pay can lead to low wage employees being unfairly disadvantaged.

Jonathan David, founder and CEO of advance app FlexEarn, said it is vital organisations actively avoid underpaying employees. He told HR magazine: "For one, this intervention shows the government has lost its patience with payroll deficiencies. And they have a point.

"For another, for the vast majority of workers, their salaried income is their only income. So it's imperative employers take this responsibility seriously."

Even unintentional shortfalls can undermine the fragile trust between companies and their people, said David.

He added: "Rather than seeing payroll as an inconvenient administrative process, smart employers should seize the opportunity not only to treat their employees fairly, but also to build goodwill by offering payroll related perks such as earned wage access."

Matt Jenkin, head of employment law at Moorcrofts, said organisations need to understand the national minimum wage regulations and ensure that they comply with them. 

Speaking to HR magazine, he said: “Breaches can be expensive, with employers not only having to pay the underpayment but also being subject to a penalty, currently 200% of the total underpayment, subject to a cap. 

“These penalties, together with the negative publicity that breaching the regulations can bring, means that even relatively minor breaches can cause significant cost to employers particularly for large employers were a small breach could impact significant numbers of employees.”