There are several traps employers can fall into which mean employees do not receive the national minimum wage. Charlie Barnes and Susan Ball outline the five most common NMW mistakes.
All UK workers are entitled to the national minimum wage (NMW), but establishing whether a worker is being underpaid isn’t easy. It’s crucial to be aware of the most common mistakes employers don’t know they’re making.
HMRC has a dedicated NMW taskforce which inspects businesses at risk of underpaying NMW and follows up all workers’ complaints of not being paid NMW. If HMRC concludes the employer has underpaid staff, it issues a notice of underpayment requiring employers to repay all underpayments over the past six years. A penalty of up to 200% of the underpayment will also be imposed, and if the total underpayment over six years exceeds 500, the employer will be reported to the Department for Business and Trade for public naming and shaming, risking reputational damage.
We’ve seen an increase in interventions by HMRC, and this is likely to continue. We recommend employers remain vigilant to NMW weaknesses, and if unsure seek appropriate advice.
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Here are the five most common mistakes leading to NMW underpayment.
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