Over 200 companies in the UK, including well-known retailers like WH Smith, Marks & Spencer, Argos and LloydsPharmacy, have been collectively fined £7 million for failing to pay their employees the legal minimum wage. The violations were discovered by inspectors at HM Revenue and Customs (HMRC), who found various breaches such as workers being asked to pay for aspects of their uniforms or being paid incorrect apprenticeship rates. As a result, these businesses had to pay out £4.9 million to approximately 63,000 workers who were left out of pocket.
The list of offending companies encompasses a range of industries, from fashion brands and car washes to hotels and takeaway businesses. The government emphasised that this decision demonstrates that companies failing to pay staff properly will face the consequences.
WH Smith, a prominent presence in airports and train stations across Britain, topped the list of companies that fell short on wage payments. They owed over £1 million to 17,607 workers, amounting to approximately £58 per employee. WH Smith attributed the mispayment to a 2019 review by HMRC, which identified the company’s misinterpretation of statutory wage regulations related to uniform policies for store staff. The company promptly rectified the error and reimbursed all affected employees an average of £40 for expenses related to clothing items.
LloydsPharmacy, ranking second on the list, was found to owe more than £900,000 to nearly 8,000 workers. The underpayment was also unintentional and linked to the company's uniform rules. LloydsPharmacy acted swiftly to rectify the issue, reimbursing the affected employees and updating their uniform policy to prevent a recurrence.
Marks & Spencer came in third place among the companies found to have incorrectly paid their workers, owing just over £100 each to 5,363 employees, totalling £578,000. The retail giant clarified that it was named due to an unintentional technical issue that occurred over four years ago, specifically related to weekly payments for some temporary workers. They asserted that their minimum hourly pay has always been above the national minimum wage and that no employees were ever underpaid due to this issue.
Sainsbury's, the parent company of Argos, acknowledged a violation dating back to 2012, before they acquired the catalogue chain. The supermarket launched an investigation and promptly addressed the problem upon its identification in 2018. Sainsbury's integrated Argos into their systems to prevent such issues from recurring and emphasised the significant investment made in colleague pay, resulting in a 53% increase in the Argos colleague hourly rate over the past seven years.
Kevin Hollinrake, the minister for enterprise, markets, and small business, acknowledged that while not all minimum wage underpayments were intentional, there is no excuse for underpaying workers. He stressed that paying the legal minimum wage is non-negotiable and businesses - regardless of their size - should know better than to shortchange hard-working staff. Hollinrake's message to the minority of companies disregarding the law was clear: pay your staff properly or face the consequences.
The fines imposed on these companies highlight the importance of adhering to minimum wage regulations and treating employees fairly. The government's list of employers penalized for minimum wage breaches between 2017 and 2019 included 202 businesses, amounting to nearly £5 million in underpayments. While unintentional breaches may occur, the government stressed that there is no excuse for underpaying workers.
The release of this list could have reputational implications for the companies involved, even if the underpayments were unintentional. Employers who have minimal or unclear communication with their workforce regarding these breaches risk employees seeking further investigation from organisations like the Advisory, Conciliation and Arbitration Service (ACAS) or HMRC, potentially leading to disruptions in their workforce.
To assist employees in verifying their pay, HMRC has established a dedicated portal. This initiative aims to ensure that workers are aware of their rights and can report any discrepancies in their wages to the appropriate authorities. By holding companies accountable for their wage practices, the UK government aims to create a fair and equitable work environment for all employees.
