· News

National Minimum Wage: Underpaying employers named

Retail, hairdressing and hospitality businesses were among the most prolific offenders

Around 230 employers have been named by the Department for Business, Energy and Industrial Strategy for underpayment of the National Minimum or Living Wage.

More than 13,000 workers will get around £2 million in back pay. As well as paying back staff the money owed, employers on the list have been fined a record £1.9 million by the government. Retail, hairdressing and hospitality businesses were among the most prolific offenders.

Argos has been named as the worst offending organisation, having failed to pay £1,461,881.78 to 12,176 workers. Employees had been required to attend briefings before their shifts started, but without being paid. They also had to undergo security searches after their shifts ended.

Argos CEO John Rogers said that the firm had taken immediate action when this was discovered. “Shortly after we [Sainsbury’s] acquired the Argos business last year it was brought to my attention that, as part of a routine visit, HMRC had uncovered an issue with some Argos store systems and processes, which meant that some colleagues had been paid below the national living wage,” he said.

“Sainsbury’s prides itself on being a trusted brand where people love to work and I was, therefore, very disappointed to hear this and launched an immediate investigation. I am pleased to say the issue was resolved quickly and processes have been updated to ensure this cannot happen again.”

The hairdressing and beauty industry featured prominently on the list, with around 60 employers named owing a total of around £121,000 arrears for about 200 workers.

Since 2013, the government's scheme to name employers who have failed to pay the National Minimum Wage and Living Wage has identified £6 million back pay for 40,000 workers, with 1,200 employers fined £4 million. Common errors made by employers included deducting money from pay packets to pay for uniforms, failure to account for overtime hours, and wrongly paying apprentice rates to workers.

Business minister Margot James said today’s announcement highlights the government’s position towards employers who flout the law. “Today’s naming round identifies a record £2 million of back pay for workers and sends the clear message to employers that the government will come down hard on those who break the law,” she said. “It is against the law to pay workers less than legal minimum wage rates, short-changing ordinary working people and undercutting honest employers.”

National Living Wage director Katherine Chapman said: "While we welcome the clamp down on minimum wage law exploitation – the truth is that the government's National Living Wage remains below what people need to earn to meet their living costs. With inflation rising higher than wages, people are struggling to make ends meet. The good news is that over 3400 employers are paying a real Living Wage to all staff and onsite contractors and we encourage more businesses who are able to do the same."

The current minimum wage rates are:

  • National Living Wage (25 years and over) - £7.50 per hour
  • Adult rate of National Minimum Wage (21 to 24-year-olds) - £7.05 per hour
  • 18 to 20-year olds - £5.60 per hour
  • 16 to 17-year-olds - £4.05 per hour
  • Apprentice rate - £3.50 per hour for apprentices under 19, or over 19 and in the first year of an apprenticeship