It has been reported that the Government has called out more than 200 businesses that have not been paying their staff the correct minimum wage.
The Department for Business and Trade have said the brands that are not correctly paying their staff include Argos, WH Smith, and Marks & Spencer. It is said that 202 employers face penalties of nearly £7 million.
The employers are now required to reimburse staff for being underpaid, with some of the breaches going back ten years. According to the Government, roughly 63,000 employees were considerably underpaid by their employers.
What is the minimum wage currently?
On 1 April 2023, the national minimum wage increased by 9.7% to £10.42 per hour (for people aged 23 and over). The Government has said that this is set to raise to two-thirds of median earnings in 2024 if the economic conditions allow.
The Government has said that the underpayments have happened in several ways:
- 39% of employers withheld money from employees’ salaries;
- 39% of employers did not pay employees correctly for their working hours; and
- 21% of employers paid staff the wrong apprenticeship rate
Minister for Enterprise, Markets, and Small Business, Kevin Hollinrake, commented:
“Paying the legal minimum wage is non-negotiable. All businesses, whatever their size, should know better than to short-change hard-working staff.
Most businesses do the right thing and look after their employees, but we’re sending a clear message to the minority who ignore the law: pay your staff properly or you’ll face the consequences.”
WH Smith reportedly paid over 17,000 workers the incorrect rate which resulted in them missing out on just over £1 million collectively. Lloyds Pharmacy has also been paying their staff incorrectly with 7,916 being underpaid by over £900,000 collectively.
WH Smith has since said the business had misinterpreted guidelines surrounding uniforms, such as asking employees to wear specific clothing items but not repaying them for it.
A spokesperson for WH Smith said:
“Following a review with HMRC in 2019 and in common with a number of retailers, it was brought to our attention that we had misinterpreted how the statutory wage regulations were applied to our uniform policy for staff working in our stores”.
However, he went onto say:
“This was a genuine error and it was rectified immediately with all colleagues reimbursed in 2019.”
Argos and Marks and Spencer also paid their staff less than required by sums of £480,093.58 and £578,390.79 respectively.
Chair of the Low Pay Commission, Bryan Sanderson, commented:
“The minimum wage acts as a guarantee to ensure all workers without exception receive a decent minimum standard of pay. Where employers break the law, they not only do a disservice to their staff but also undermine fair competition between businesses.
The Government has been clear that anyone entitled to be paid the minimum wage should receive it, and that robust enforcement action will be taken against employers who do not pay their staff correctly.”
To avoid a claim being brought against you, you must ensure that anyone entitled to minimum wage is receiving it.
How can we help?
Kate Frisby is a Trainee Solicitor at Nelsons.
For advice on or further information in relation to the subjects discussed in this article, please contact Kate or a member of our expert Employment Law team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online form.
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