The government has named 191 organisations that breached minimum wage requirements, including household names such as John Lewis, McColl’s, One Stop Stores, Welcome Break and The Body Shop.
Together, the 191 employers underpaid workers by £2.1m between 2011 and 2018, with 34,000 workers affected.
Following investigations by HM Revenue & Customs, they were fined a total of £3.2m and made to pay back what they owed to workers at current minimum wage rates.
Business minister Paul Scully said: “Our minimum wage laws are there to ensure a fair day’s work gets a fair day’s pay – it is unacceptable for any company to come up short. All employers, including those on this list, need to pay workers properly.”
Bryan Sanderson, chair of the government’s Low Pay Commission, said: “These are very difficult times for all workers, particularly those on low pay who are often undertaking critical tasks in a variety of key sectors including care. The minimum wage provides a crucial level of support and compliance is essential for the benefit of both the recipients and our society as a whole.”
Low pay
Low-paid workers at greatest risk of redundancy
Pandemic has increased risk of minimum wage breaches
Part-time, low-paid and ethnic minority workers facing poverty
Earlier this year, the Low Pay Commission said the pandemic had increased the risk of national minimum wage underpayment because workers who were worried about job uncertainty were less likely to challenge their employer if errors were suspected, and because flexible furlough had made calculations more complicated.
The most common minimum wage error involved organisations wrongly making pay deductions, including for uniform and expenses (47% of employers on the list).
Thirty per cent failed to pay workers for all the time they had worked, including overtime, while 19% paid the incorrect apprenticeship rate.
Other employers did not apply increases to employees’ wages when minimum wage rates were updated, did not correctly apply the accommodation offset, or paid workers for the incorrect type of work – for example, incorrectly categorising a worker on an hourly rate as a salaried worker.
John Lewis underpaid 19,392 workers to the tune of £941,355.67 between February 2013 and September 2018.
A John Lewis Partnership spokesperson said: “We’re surprised and disappointed that BEIS has chosen to report this today. This was a technical breach that happened four years ago, has been fixed and which we ourselves made public at the time. The issue arose because the Partnership smooths pay so that partners with variable pay get the same amount each month, helping them to budget. Our average minimum hourly pay has never been below the national minimum wage and is currently 15% above it.”
Convenience store operators Martin McColl Retail and One Stop Stores underpaid 4,366 and 2,631 workers by a total of £258,047.80 and £56,505.04 respectively.
A McColl’s spokesperson said: “As a responsible employer we take this matter, which relates to colleague time and attendance recording processes that were in place from 2015 to 2018, very seriously. After becoming aware of the matter in early 2018, we took immediate action to apologise to and reimburse affected colleagues. We also put in place robust measures for recording working time into our stores to ensure it does not happen again.”
A One Stop spokesperson said the average reimbursement per employee was less than £22, “This is an historic issue relating to our colleague uniform policy that occurred between May 2013 and December 2017, all affected colleagues were reimbursed. We are very sorry this happened and have worked cooperatively with HMRC throughout this process.
Motorway services company Welcome Break owed a total of £49,031.77 to 1,591 workers, while retailer The Body Shop underpaid 959 workers by £34,670.81.
A Welcome Break spokesperson said: “In 2018, HRMC informed us, along with many other businesses, that our policy on team member uniforms inadvertently led to a breach of the national minimum wage. As soon as we were made aware of this oversight, we fully reimbursed and apologised to all affected team members. We never intended to underpay our employees and have strengthened our policies and training to prevent this from happening again.”
In a statement, The Body Shop said it was is committed to paying UK employees the “Real Living Wage”, adding: “We fully cooperated with HMRC during a routine audit in 2018 which identified that we needed to reimburse a number of store-based employees for uniform costs. This was to cover clothing that our store-based colleagues wore in our stores from 2015-2018; a time when the company was transitioning from its previous ownership. The affected employees, which include previous and current employees, were reimbursed and our case was closed in 2018. We also reviewed our uniform policy to allow our employees to wear their own clothes to reflect their individual styles and personalities whilst working in our stores.”
The national living wage for workers aged 23 and over is currently £8.91. The national minimum wage is £8.36 for those aged 21 to 22; £6.56 for those aged 18 to 20; £4.62 for under 18s; and £4.30 for apprentices.
As a significant proportion of the minimum wage breaches identified in this round of “naming and shaming” involved apprentices, the government has published an educational bulletin to help employers ensure they are paying apprentices properly.
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As well as being required to pay workers what they are owed at current national minimum wage rates, employers who breach the rules also face fines of up to 200% of arrears, capped at £20,000 per worker, which are paid to the government.
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