Employers who fail to pay the National Minimum Wage to be named and shamed

This week the government has published details about its plans to name and shame employers who fail to pay the National Minimum Wage (NMW). The new scheme came into force with effect from 1 January 2011. The scheme is supported by The Low Pay Commission and The Department for Business, Innovation and Skills (BIS).

Under the scheme HMRC will continue to act as enforcement officers for the government. When HMRC receives information about a potential failure to pay the NMW they will carry out a full investigation of the employer's business, considering payroll records and interviewing staff. If they conclude that the employer has acted illegally then a "Notice of Underpayment" will be issued.

The Notice sets out the arrears to be paid to the employees and the penalty for non compliance, which can be up to £5,000. Under the new scheme, upon issuing the Notice HMRC will consider whether to inform BIS about the employer's failure. Amongst other things, one or more of the criteria below must be met before an employer can be named:

  • There is evidence that the employer knowingly or deliberately failed to comply with its NMW obligations;
  • The employer failed to take adequate steps to keep or preserve NMW records;
  • There is evidence that the employer previously received advice form HMRC about how to implement the NMW and failed to follow the advice; and
  • The employer delayed or obstructed an NMW compliance officer in their duties.

Employers will only be put on the list if their total arrears is over £2,000. They will also have 28 days to make representations to BIS as to why they should not be named, for example if they can show that there is a real risk of harm to an individual or their family.

The list of disgraced employers will be published by BIS in a press release which will inevitably be picked up by the national press. The idea behind the scheme is that some employers may find the bad publicity from being named a greater deterrent than the financial penalties of failing to pay the NMW.

The NMW for workers over 21 is currently £5.93 per hour and the full BIS report can be found on their website: