Companies ‘named and shamed’ in a government investigation will face a record £1.9 million fine and be forced to repay their staff. Comment from Frances O’Grady, the TUC’s General Secretary.

More than 13,000 low paid workers are to be handed around £2 million in back pay after bosses were found to be in breach of the National Minimum Wage (NMW) or a National Living Wage (NLW). The HMRC published its latest list of offenders after an investigation into hundreds of businesses from across the UK. Catalogue retailer Argos was revealed as the worst culprit having reportedly failed to pay nearly £1.5 million to more than 12,000 staff.

‘A Clear Message’
Sainsbury’s – which owns Argos – had warned in February that the amount was actually £2.4 million affecting 37,000 people, when taking into account both current and former staff. All staff are now reported to have received their back pay.

Other firms ‘named and shamed’ last week include the healthcare recruitment agency Pearson Anderson, hairdressing and beauty treatment businesses, firms in the hospitality sector and retailers.

Business minister Margot James said the investigation sent a ‘clear message to employers that the Government will come down hard on those who break the law’.

She continued: “It is against the law to pay workers less than legal minimum wage rates, short-changing ordinary working people and undercutting honest employers.”

Frances O’Grady, the TUC’s general secretary, added: “This should be a wake-up call for employers. If you cheat staff out of the minimum wage, your reputation will be dragged through the mud.”

A Political ‘Hot-Topic’
This is only the latest in a series of occasions in which high street names and a host of smaller firms have been embarrassed over minimum wage breaches.

In February, Debenhams was found to have underpaid nearly 12,000 employees by as much as £11.37 per worker.

At the time, a total of 360 employers were forced to pay £995,233 to the 15,500 workers affected, plus penalties from HMRC of more than £800,000.

Sports Direct, John Lewis, Monsoon-Accessorize and football clubs Brighton & Hove Albion and Blackpool FC have all fallen foul of the rules on other occasions.

The Government introduced its ‘naming and shaming’ scheme in 2013. Since then, it has identified more than £6 million in back pay and fined more than 1,000 employers. Meanwhile major broadcasters and newspapers have lined up to ‘tear a strip’ off well-known retailers and brands.

Putting aside recent high profile legal cases connected to the ‘gig economy’ – where ‘casual’ workers have campaigned for benefits and pay afforded to contracted employees – the minimum wage remains a political ‘hot-topic’.

The Government is involved in a wide-ranging effort to pro-actively protect the integrity of the NLW and NMW and ensure that workers are getting a ‘fair deal’ at work.

Understanding The Law
So how have so many employers found themselves in trouble over the minimum wage?  The NMW and NLW is the minimum pay per hour most workers are entitled to by law, largely based on age.  The NLW applies if the employee is over 25 and is currently £7.50 and hour.

If the employee is under 25 they will fall into one of several NMW brackets ranging from £7.05 for those aged 21-25, to £3.50 for a first-year apprentices, irrespective of age.The Government’s minimum wage guidance say an employer must calculate the total number of hours worked or contracted and then divide this by the wages paid out in any and all pay periods.

It further states that the minimum wage must be met or exceeded, on average, for every pay period, defined by the method of pay (per week or month) and not just over a year.

Not all time spent on work premises needs to be included when calculating pay, but all the time an employee spends at the discretion of the employer – working duties – must be included.

As such, break times do not count towards the minimum wage calculation, but time spent in work briefings and other work-related activities – such as security searches – do. Other activities which fall under the minimum wage criteria include waiting for meetings to begin or waiting to collect goods. Any delays due to broken machinery or equipment is also covered.

For those who travel as part of their work, time spent commuting to and from home, including for first or last appointments, doesn’t count, but all other travelling does. Companies can also fall foul of regulations by making unlawful deductions from pay . This might include recovering expenditure for travelling expenses or for like tools and uniforms.

Workers who feel they are being mistreated can raise a grievance with their employer and contact HMRC who will investigate. If it is found that the employer has been underpaying, HMRC will send a notice of arrears and a penalty for failing to meet the correct rate of pay.

In the case of Argos, the shortfall was linked to the timing of staff briefings – before workers had clocked on to their shifts – and security searches – which happened after workers had finished a shift.

John Rogers, chief executive of Argos, said: “Sainsbury’s prides itself on being a trusted brand where people love to work and I was, therefore, very disappointed to hear this and launched an immediate investigation.

“I am pleased to say the issue was resolved quickly and processes have been updated to ensure this cannot happen again.” Other companies named and shamed last week had deducted money from pay packets to pay for uniforms, failed to account for overtime hours and wrongly paid apprentice rates to workers.