Making sure employees are paid the minimum wage is something which sounds obvious and straightforward. Last month, however, HMRC named over 200 employers who failed to pay their employees the minimum wage. This breach of National Minimum Wage (NMW) law by 202 employers, added up to £5 million in underpayments, and left around 63,000 workers out of pocket. Among the businesses named were major high street brands like Marks and Spencer, Argos and WH Smith, as well as various SMEs and sole traders.
Regarding the naming of these businesses, here’s what Minister for Enterprise, Markets and Small Business Kevin Hollinrake had to say:
“Paying the legal minimum wage is non-negotiable and 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.”
The investigations by HMRC took place between 2017 and 2019. The businesses which were listed have paid back what they owed their staff and have also faced financial penalties. However, the loss of trust and the reputational damage these underpayments have caused, may be much harder to repair.
The employers named last month were found to have underpaid workers in the following ways:
As a payroll processor, you’re responsible for making sure that clients’ employees are paid fairly and according to the law— and that means understanding the ins and outs of minimum wage calculations. It’s important to keep in mind the different minimum wage rates that apply to different age and work categories. The rates are updated annually, so make sure you’re always using the current rates. Check out our blog to see the NMW rates for this tax year. Your payroll software provider should update their software each year to reflect new minimum wage rates.
It’s the responsibility of the client to make sure that you have all the information you need, and that the information you have is correct, to ensure that employees are paid the correct rates. Examples of this information could be an employee’s date of birth, their employment status, the hours they worked, details of any overtime and training or travelling time.
With the right payroll software, you and your clients can rest assured that their payroll is in compliance with Irish law.