Greggs, Easyjet and River Island were among the most recognisable employers who have been named by the government as having failed to pay the national minimum wage to some workers.
The Department for Business and Trade yesterday published a list of 524 employers who have collectively left 172,000 workers a combined £16 million out of pocket, although many of the cases date back several years.
The list’s release comes as the national living wage is set to increase to £11.44 per hour on 1 April 2024, as well as extending its reach to 21 and 22-year-olds.
Minimum wage underpayment
The businesses on the list have since paid back what they owed to their staff and have also faced financial penalties of up to 200% of their underpayment. The investigations by HMRC concluded between 2015 and 2023.
Business minister Kevin Hollinrake said that while “not all minimum wage underpayments are intentional, the government has been clear that anyone entitled to be paid the minimum wage should receive it, and that enforcement action will be taken against employers who do not pay their staff correctly.”
Independent commissioner at the Low Pay Commission, Patricia Rice, said that not only did underpayment cheat workers of their rightful due, “it leaves compliant firms undercut by those who do not abide by the law. By naming the firms responsible for significant underpayment, we raise awareness of the nature and the scale of underpayment and encourage all employers to ensure that they fully comply with the law.”
The largest amount that was failed to be paid to staff was more than £5 million that should have been paid to 36,800 workers by Staffline Recruitment of Nottingham.
In a statement, the company said: “Staffline would like to clarify that these are historic breaches and related to the period 2013 to 2018. Remedial actions were taken in 2019 and formally concluded with HMRC to their complete satisfaction in 2020.”
In 2019, Staffline shares slumped after auditors set aside £8 million for the underpayment, which related to not paying workers for the time taken to change clothes before and after shifts on food production lines.
Estee Lauder Cosmetics failed to pay £895k to 5,930 workers and Mitchells & Butler failed to pay £565k to 16,200 workers. EasyJet was not far behind, having failed to pay £339,000 to 3,900 workers. Greggs, in 11th place on the list, failed to pay £219k to 4,800 workers.
Estee Lauder said: “In 2019, like many other companies, we were made aware that we had misinterpreted guidance from HM Revenue & Customs on the way in which payment was taken for voluntary staff purchases of our concession products and on staff clothing requirements. We immediately made sure all affected employees were informed and reimbursed and updated our procedures.”
Mitchells & Butlers said its underpayment was unintentional and blamed a “technical misinterpretation of the regulations” which it identified in 2019. It said: “All arrears due were paid to our valued employees and ex-employees at the end of the review and we have updated our policies where necessary.”
EasyJet said some cabin crew were paid less than allowed for their first three weeks when they were training between 2014 and 2019. “This was a genuine error which we immediately rectified and issued back payments to all affected crew,” it said.
Greggs said: “During a review with HMRC, it was brought to our attention that our uniform policy for retail colleagues was not aligned with HMRC’s interpretation of national minimum wage regulations, and as a result, we revised our uniform policy in January 2018.
“Once the review was concluded, we reimbursed colleagues and former colleagues who had been impacted by this unintended error.”
Jason Davenport, CEO of the Chartered Institute of Payroll Professionals, said the most common areas where firms made incorrect calculations took place “in the form of deductions from pay, for things like uniforms, and unpaid working time. For example, if workers must pass through a security check as part of their job, this should be paid as working time.”
He added that CIPP members had raised concerns about the impact of national minimum wage increases on salary sacrifice arrangements, particularly with pension contributions. He added: “In the coming increase to rates, many are concerned that workers previously eligible to have their pension contributions taken through salary sacrifice, will no longer be able to, and therefore lose the national insurance savings that come with that.”
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Latest HR job opportunities on Personnel Today
Browse more human resources jobs
