More than 200 businesses have been called out by the government for not paying workers the correct minimum wage.
The brands named by the Department for Business and Trade include WH Smith, Argos and Marks & Spencer, and a total of 202 employers face penalties of almost £7 million.
They must also reimburse workers for underpayment, with some breaches going back a decade. Around 63,000 workers were left out of pocket by their employers, according to the department.
On 1 April, the national living wage (for those over the age of 23) went up 9.7% to £10.42 per hour. The government has committed to raising this rate to two-thirds of median earnings by 2024, “provided economic conditions allow”.
The government said underpayments happened in a number of ways: 39% of employers deducted pay from workers’ wages; 39% of employers failed to pay employees correctly for their working time; and 21% of employers paid the incorrect apprenticeship rate.
National minimum wage
Five national minimum wage mistakes employers make
National minimum wage 2023: Pay rises for 1.6 million workers
National living wage projected to reach to reach £11.08 in 2024
Kevin Hollinrake, minister for enterprise, markets and small business, said paying the legal minimum wage is “non-negotiable”.
“All businesses, whatever their size, should know better than to short-change hard-working staff,” he said.
“Most businesses do the right thing and look after their employees, but we’re sending a clear message to the minority who ignore the law: pay your staff properly or you’ll face the consequences.”
Retailer WH Smith failed to pay more than 17,000 workers the correct rate, meaning they missed out on just over £1m collectively. Lloyds Pharmacy failed to pay more than £900,000 to 7,916 workers.
WH Smith said it had misinterpreted rules around uniforms, having asked staff to wear specific items but not reimbursing them for it.
“Following a review with HMRC in 2019, and in common with a number of retailers, it was brought to our attention that we had misinterpreted how the statutory wage regulations were applied to our uniform policy for staff working in our stores,” a spokesman said.
“This was a genuine error and it was rectified immediately with all colleagues reimbursed in 2019.”
Marks & Spencer and Argos also underpaid workers by sums of £578,390.79 and £480,093.58 respectively.
Bryan Sanderson, chair of the Low Pay Commission, added: “The minimum wage acts as a guarantee to ensure all workers without exception receive a decent minimum standard of pay. Where employers break the law, they not only do a disservice to their staff but also undermine fair competition between businesses.
“Regular naming rounds should be a useful tool in raising awareness of underpayment and helping to protect minimum wage workers.
“The government has been clear that anyone entitled to be paid the minimum wage should receive it, and that robust enforcement action will be taken against employers who do not pay their staff correctly.”
Samantha O’Sullivan, policy lead at the Chartered Institute of Payroll Professionals, said the reputational impact of underpayment should not be under-estimated.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
“The additional cost of adminstration for backdating this is incentive enough to get it right first time,” she said. “During a cost-of-living crisis the impact this can have on workers is also a huge factor contributing ton the uproar in the media. Something no company wants.”
Compensation and benefits opportunities on Personnel Today
Browse more compensation and benefits jobs
