HMRC investigators have exposed some of the strangest excuses used by employers not paying their staff according to National Minimum Wage rules. 

Reasons include that the National Minimum Wage was not applicable to their business, workers need to prove their worth to be paid the rate or that it was acceptable to underpay foreign workers.

Others lay the blame at someone else’s door. One employer argued that their accountant spoke a different language and didn’t understand them, which is why the workers were underpaid. Another said that the workers consider themselves to be self-employed and the national minimum wage does not apply to them.

Perhaps one of the most ridiculous reasons was that the worker did not deserve to be paid the minimum wage rate as all she did was make tea and sweep the floor!

The law

Employers are reminded that all workers must be paid at least the National Living Wage of £7.20 per hour if they are aged 25 or over.

For those under 25, the National Minimum Wage applies. The current hourly rates are as follows:

• For workers aged between 21 and 24, the rate is £6.95.
• For those aged between 18 and 20, it is £5.55.
• The rate for 16 and 17 years olds is £4.00.
• Apprentices must be paid at least £3.40.

Please note the rates are set to rise in April 2017. The National Living Wage will increase to £7.50. The National Minimum Wage will increase to £7.05 for workers aged between 21 and 24; £5.60 for those aged between 18 and 20; £4.05 for 16 and 17 year olds and £3.50 for apprentices.

Failure to pay the required minimum can bring about unpleasant consequences. If HMRC is tipped off that your workers are being underpaid, they can carry out investigations and ask for records. You can face, for example, civil penalties, being “named and shamed” publicly and even in serious cases, criminal prosecution.

No excuses allowed

Business Minister Margot James stated that “There are no excuses for underpaying staff what they are legally entitled to”.

Recently, the government has made a beeline for employers who are not abiding by their minimum wage duties. They are launching a 1.7 million campaign with the aim on ensuring that workers are paid at least the minimum rates. This follows the autumn statement, where Phillip Hammond revealed that £4.3 million will be spent on assisting small businesses understand minimum wage rules and cracking down on those employers who break the law by not paying their workers the national minimum wage rates.

Understand the law and your responsibilities. Avoid getting in trouble and seek legal advice. Our Employment Law Advisers can help you act in accordance with the law.