15th May 2018

Back in March, HMRC released its latest list of employers guilty of underpaying thousands of workers earning the National Minimum (NMW) and National Living (NLW) wages. Standing at over 180 business, the inclusion of some extremely high-profile cases including Marriott Hotels, TGI Fridays and Wagamama highlights the ruthless nature HMRC has employed when dealing with those who are not NMW/NLW compliant.

Having doubled its resource in this area, with around £25m invested into further enforcement teams to deal with these issues, HMRC have yielded almost £800M from compliance reviews. However. the complexity of the rules and HMRC’s interpretation of individual cases means that it is very easy for employers to make entirely innocent errors. Five of the most common mistakes made include:


Underpaying workers

  • Failure to implement annual rate increases
  • Miss birthday increases
  • Errors in applying the apprentice rates (Aged 19 or under, Aged 19 or over and in the first year of apprenticeship)

Making deductions that take a worker’s pay below the correct rates

  • Uniforms (Wagamama cite a misunderstanding around uniform payments as the reason for their failure to comply with NMW rules and regulations)
  • Meals
  • Transport
  • Accommodation

Including Payments

  • Shift allowances
  • Customer tips
  • Bonuses

Worker status errors

  • Volunteers
  • Interns
  • Self-employed

Unpaid Working Time

  • Hours worked but not paid e.g Travel Time
  • Training time and out of hours


Lee Muter, Employment Taxes Partner at UNW, comments: “It is clear that a lot of employers who are included on the list of those named and shamed have been guilty of no more than inadvertent technical breaches, rather than wilful non-payment.”

“Despite this, employers in this position face not only being named and shamed, but also draconian penalties of 200% of the wages underpayment. To avoid this position, employer should review their current, and ongoing, adherence to the National Minimum Wage and where they find any discrepancies use Self Correction to avoid the double whammy of penalties and adverse publicity.”


UNW is a leading independent firm of chartered accountants and business advisors that delivers a wide range of services to its clients. For more information regarding our employment tax and payroll services, please visit http://www.unw.co.uk/expertise/employment-taxes/ or you contact Lee Muter at leemuter@unw.co.uk or on 0191 243 243 6089.

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