The Government has published the latest list of employers who’ve failed to pay at least the National Minimum Wage (NMW).
Almost 500 employers have been ordered to repay £6 million to almost 42,000 workers, plus £10.2 million in fines.
Enforcement is only set to increase, with a new Fair Work Agency launching in 2026 under the Employment Rights Bill, bringing stronger powers to tackle underpayments and failures to pay holiday or sick pay.
Underpaying NMW is rarely intentional, but we frequently see some common pitfalls that can lead to accidental NMW underpayments.
What do you need to watch out for?
Robust record keeping – accurate NMW records are your best defence. You’ll need to keep them for at least three years, but given that civil claims can be brought up to five years after a breach, it’s worth going belt and braces and keeping them for longer.
Uniform costs – if employees are required to buy clothing for work, the cost must be deducted from their hourly pay when checking NMW compliance.
Even asking staff to wear their own clothes of a specific type or colour (for example, black jeans and black shoes) can count as a ‘uniform’ cost that reduces take-home pay and should be factored into NMW calculations.
Accurate time recording – we often see clocking in and out systems that automatically round start and finish times. That can mean the time actually worked isn’t fully recorded which can easily tip you below NMW if they’re already close to the threshold.
Salaries – salaried employees can still catch you out if you’re not careful. If someone’s pay is close to or at NMW, be careful dividing the salary into 12 equal instalments when calculating their monthly pay. Longer months can push their pay below the NMW. Take advice to confirm that individuals can properly be treated as salaried workers and avoid unintentional underpayments.
How can we help?
We can carry out a National Minimum Wage audit to identify any potential risk areas to address, before HMRC does. If you’d like to talk through your approach or sense-check your calculations, get in touch – we’ll help you make sure your pay practices stay compliant and protect your reputation.
This update is accurate on the date it was published but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.
