National Minimum Wage investigations have drastically increased

15th September 2020

National Minimum Wage investigations by HM Revenue & Customs (HMRC) have increased significantly, according to the latest research.

These inspections rose due to modern slavery reports and other controversial probes into UK garment factories.

To guarantee that workers are paid correctly, HMRC regularly uses its authority to conduct civil investigations. However, in more extreme cases, advanced measures are put into place.

For example, if an employer refuses to cooperate with HMRC and has been non-compliant, HMRC can launch a criminal investigation into the infringement.

Additionally, these investigations can initiate if a large proportion of the public has taken an interest in persecuting an employer for breaching employment laws.

Currently, the NMW is as follows:

  • Apprentices – £4.15
  • Under 18s – £4.55
  • 18 to 20 – £6.45
  • 21 to 24 – £8.20
  • 25 and over £8.72

According to this research, NMW investigations increased from 2,807 (2018) to 3,561 in 2019. Moreover, the location with the most NMW probes was Aberdeen, with 10.2 being conducted per 100,000 population. The locations next in line, with a high number of investigations, are as follows:

  • Blackburn – 9.8
  • Birmingham – 9.6
  • Belfast – 9.1
  • Leicester – nine

Investigations such as these can be costly for employers. Penalties can reach up to 200 per cent of arrears owed to workers – which is a maximum of £20,000.

£17.1 million worth of 1,008 penalties were imposed by HMRC in 2018, which is an increase from £14.1 million worth of 810 penalties in 2017.

What actions can employees take?

If an employee believes they have been underpaid the NMW, they have the right to ask for and make copies of their payment records. With these copies, employees can then take the issue to HMRC, who will conduct their civil investigations.

What actions should employers take to prevent penalties?

Many employers breach the NMW rules accidentally, due to unforeseen complications with the rules, the research suggests. Therefore, it is essential for employers to continually review their payment practises and self-correct any errors to decrease their chances of being fined.

For any advice regarding underpayments or payment practises in your business, please contact us.