Changes to National Minimum Wage Rates
More than 100 companies, including some of the UK’s biggest household names, have been named and shamed by the government for failing to pay workers the minimum wage.
The government investigated claims of failure to pay the national minimum wage (NMW) between 2016 and 2018, and discovered the 139 named firms failed to pay £6.7m to more than 95,000 workers in total.
Among those named was restaurant chain Pizza Hut, which failed to pay 10,980 workers the NMW, totalling approximately £845,936.
St Johnstone Football Club owed £14,266.74 to 28 workers, 25 of whom were apprentice footballers. A spokesman for the Scottish Premiership club told the BBC the underpayments were related to voluntary deductions from pay and that changes had been implemented following a review of apprentices’ working hours.
Other firms on the list include Superdrug, Müller UK & Ireland Group, Costco Wholesale UK and Tesco, which failed to pay £5,096,946 to 78,199 workers, although the supermarket told the BBC the underpayment was a result of a technical fault and that it had reported the issue to HMRC itself.
This is the first time the government has published the names of companies for failing to pay the NMW since 2018, following changes that mean this will be done more frequently, but only the worst offenders will be targeted.
The naming scheme had been paused so that an evaluation of its effectiveness could be carried out; however, the government announced on 11 February 2020 that the scheme would resume.
HMRC, which led the investigation, said preserving and enforcing workers’ rights was a “priority for this government”, and the publication of the list was intended to serve as a warning to “rogue employers that the government will take action against those who fail to pay their employees properly”.
The government said one of the main causes of NMW breaches was low-paid workers being made to cover work costs such as paying for uniforms, training or parking – which would eat into their pay packet and dip it below minimum wage.
Additionally, some employers failed to raise employees’ pay after they had a birthday that should have moved them into a different NMW pay bracket.
Employers that breach NMW legislation have to pay back arrears of wages to the worker at current minimum wage rates. The firms also face hefty financial penalties of up to 200 per cent of arrears – capped at £10,000 per worker – which are paid to the government.
In November, the UK Government announced a measured increase in national living wage and NMW rates, which will come into effect from April 2021. Chancellor Rishi Sunak said the government would be accepting the advice of the Low Pay Commission by increasing the national living wage by 2.2 per cent to £8.91 per hour, as well as extending eligibility to those over the age of 23 – this marks a significant difference. Currently, at a higher rate, the National Living Wage (NLW) is applied to workers aged 25 or over, with the lower bands of the National Minimum Wage being applicable to those aged 24 and under. However from April 2021, the age threshold for the National Living Wage will be lowered to 23, resulting in a significant rate rise of 8.7% for all workers aged 23 and 24, as opposed to a raise of closer to 2% for all other workers.
The NMW will also rise. Sunak said the minimum wage increases would likely benefit around two million people, and that a full-time worker on the national living wage would see their annual earnings increase by £345 next year.
The new rates applicable from April 2021 are as follows:
- Age 23 or over (NLW rate): £8.91 (up 2.2% from £8.72).
- Age 21 to 22: £8.36 (up 2% from £8.20).
- Age 18 to 20: £6.56 (up 1.7% from £6.45).
- Age 16 to 17: £4.62 (up 1.5% from £4.55).
- Apprentice rate: £4.30 (up 3.6% from £4.15).