More than 200 organisations have been exposed by the government for failing to pay employees the minimum wage, including retailers Matalan and House of Fraser.
In its latest round of “naming and shaming” employers that have breached national minimum wage regulations, the Department for Business, Energy and Industrial Strategy highlighted 208 organisations that owed about 12,000 workers a total of £1.2m in wage arrears.
The most common error identified involved deductions that took employees’ pay below the legal minimum, including staff being left out of pocket because they had to comply with a dress code. More than a third (37%) of employers named today breached the regulations in this way.
Meanwhile, over a quarter (29%) did not pay staff for some of their working time, such as mandatory training, trial shifts or for travel time; 16% did not pay the correct rate to apprentices; and 11% failed to increase wages in line with annual increases to the national minimum wage or national living wage rates, or paid employees the incorrect rate for their age group.
“Today’s 208 businesses, whatever their size, should know better than to short-change hard-working employees, regardless of whether it was intentional or not,” said minister for labour markets Paul Scully.
“With Christmas fast approaching, it’s more important than ever that cash is not withheld from the pockets of workers. So don’t be a scrooge – pay your staff properly.”
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Among the employers named in this latest round of reporting is department store chain House of Fraser, which was found to have underpaid 354 workers to the tune of £16,235.19 – an average of £45.86 per affected employee.
A Frasers Group spokesperson made it clear that the breaches related to the period before it acquired House of Fraser out of administration.
The spokesperson said: “House of Fraser Limited has been named in the list of 208 businesses which have apparently breached National Minimum Wage rules between the period of 2012 to 2017.
“It should be made clear that Frasers Group plc only purchased the assets of House of Fraser out of administration (saving countless jobs) in August 2018. This was long after the date when these breaches are said to have happened. However, by acquiring those assets the claims are said to have passed to the new business owner.
“In short, these breaches are historic and relate to the activities of the old House of Fraser company that is now in administration and is nothing at all to do with any activities of the new House of Fraser business that is owned by Frasers Group.”
Clothing and homeware retailer Matalan was found to have owed 16 workers a total of £1,634.48 – an average of £102.16 each.
A Matalan spokesperson told Personnel Today the underpayment was an administrative error that the company noticed and reported to HMRC in March 2018.
“This relates to an historic administrative correction, regarding a very small number of employees, which we proactively identified and resolved with the relevant personnel and notified HMRC back in 2018,” said a statement from Matalan.
“Our people are at the heart of our business and we are committed to operating at the highest standards to ensure Matalan is a great and rewarding place to work and grow.”
The organisation with the largest number of workers affected in this latest round of reporting was The Challenge Network, a charity that went into administration and subsequently closed in 2019. Some 3,600 workers were underpaid, totalling £154,682.33, averaging at £42.97 per worker.
Today’s 208 businesses, whatever their size, should know better than to short-change hard-working employees, regardless of whether it was intentional or not” – Paul Scully, labour markets minister
Facilities management firm Mitie was found to have underpaid 91 workers, with arrears totalling £17,893.98 (£191.64 per worker, on average).
It told Personnel Today that an investigation by HMRC that concluded in March 2019 found Mitie to be non-compliant in two areas, both of which HMRC acknowledged were “accidental and technical in nature”.
The first was a deduction of a £1 admin fee in respect of setting up payments to the government child support agency and the second an incorrect method of calculating an hourly rate for a salaried worker. The company said it had taken steps to ensure the errors would not reoccur.
Mitie said in a statement: “HMRC accept this was a technical breach, so we are disappointed to have been included on this list.”
Organisations that breach minimum wage rules must pay staff what they are owed at current national minimum wage and national living wage rates, and also face financial penalties of up to 200% of arrears, which are paid to the government.
In April 2022, the national living wage will increase by 6.6% from £8.91 to £9.50. New national minimum wage and apprentice rates will also take effect.
Since 2015, the government’s budget for minimum wage enforcement has doubled, with employers having been ordered repay over £100 million to one million workers.
The government has released an educational bulletin to help employers meet their minimum wage obligations.
Bryan Sanderson, chair of the Low Pay Commission, which advises the government on minimum wage rates, said: “The minimum wage is a success story welcomed by employees and employers alike, but it only works if everyone without exception obeys the law.
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“We hope this latest naming round can continue to raise awareness of the most common mistakes businesses make and help protect low-paid workers from unfair treatment.”
