National Minimum Wage compliance

10 September 2024

Earlier this year, the government released their latest ‘naming and shaming’ list of employers who had been identified as not paying their workers National Minimum Wage (NMW).

As with previous lists, the employers listed included a number of large businesses and major high street brands.

Breaches are often due to technicalities rather than a deliberate intention to underpay workers, but the headlines which follow publication can damage employer reputation and disrupt their workforce.

This latest round of naming and shaming comes as the NLW increases by 9.8% to £11.44 in April 2024. The largest increase in cash terms and the first time NLW has increased in excess of £1. Other key figures include:

524 employers named and shamed;
c£16m in underpayments to over 172,000 workers;
35% of underpayments caused by employers making deductions from pay;
31% of employers failed to pay workers correctly for their working time; and
16% of employers failed to pay the correct apprenticeship rate.

The latest list of employers, one of the longest since the regime began, demonstrates that HMRC's focus remains firmly on compliance in this area. Employers should be considering their processes and procedures around NMW to ensure compliance with the NMW legislation.

National Minimum Wage risk areas

Worker categorisation
Time and attendance
Deductions from pay
Salary sacrifice
Dress code

Worker categorisation

The first step when considering NMW compliance - this determines the calculation methodology for NMW.
Worker categorisation impacts the NMW calculation period, what pay counts towards NMW and what time counts as working time.

Time and attendance

How is working time captured?
What time is paid – rota time or actual working time? Are there any working practices (at any location) which could lead to additional working time?
Common risk areas include pre-shift briefings, not taking full break entitlement or working past the end of shift.

Deductions from pay

Do any deductions from pay (from either gross or net) reduce pay for the purposes of NMW?
Common risk areas include savings and/or sports and social clubs, employee purchases and travel card loans.

Salary sacrifice

Salary sacrifice always reduces pay for the purposes of NMW and results in employees being paid at a lower hourly rate.
Are there sufficient controls in place to mitigate the risks in this area?

Dress code

Are employees required to purchase any items of clothing (such as black trousers/shoes) or additional items of a uniform to enable them to perform their duties of employment?
It should be noted that a dress code does not have to be formally documented, it could be employee’s perception on a location-by-location or role-by-role basis.

The government confirmed that the employers included in the latest round of naming and shaming have been based in the following regions:

Region	Number of employers named
London	64
North West	61
South East	55
East Midlands	55
Yorkshire and the Humber	53
West Midlands	51
Scotland	48
South West	35
East of England	33
North East	28
Wales	21
Northern Ireland	18

Data published in The Department of Business and Trade ‘National Minimum Wage Naming Scheme Round 20 February 2024 Educational Bulletin’

How RSM can help

Our specialist NMW team has a wealth of experience in supporting clients to identify and mitigate and correct historic non-compliance.

We can help with the following:

contractual reviews to determine worker categorisation;
updating contracts to clarify categorisation or mitigate NMW risks;
policy and/or work practice reviews to support with the identification of NMW risk areas;
pay element review to determine what pay elements can be included towards NMW;
educational workshops to upskill key stakeholders; and
HMRC audit support.

Where required we can support on a legally privileged basis.

Contact our specialists for more information, Andrew Timpson, Charlie Barnes, Dale Charnock or your usual RSM contact.