• Lee Calver
  • 10 June 2014

Government ‘naming and shaming’ minimum wage underpayers may not get desired results

As part of a new crackdown, the Government has ‘named and shamed’ 25 employers that have failed to pay their employees the minimum wage. However, will the Government suffer a backlash in the coming weeks as a result of releasing the latest minimum wage offenders list, which contains the largest number of employers publicly named since a new regime was announced last year?

We spoke to the tool hire giant, HSS Hire Service Group Ltd, who expressed its outrage at the decision to include its name on the list.

Explaining the situation, a spokesperson for HSS informed us:

"In October 2013 the pay of 15 colleagues was not updated with the changes to the minimum wage in that month. This was an administrative error that was immediately corrected and the underpayment (between 47p and £25 each - a total of £150) was reimbursed within the month. Further, we received an acknowledgement from HMRC confirming that they were satisfied with our response.”

They continued:

"Given these facts, it is ludicrous that HSS should have been listed with companies which actually contravene employment law. We consider this action to be both outrageous and deeply damaging to HSS' hard won reputation as a meticulously fair, inclusive and strongly progressive employer. We are currently seeking legal advice on our position and we will be seeking a robust apology from the minister concerned."

Concluding, HSS stated:

“The minimum wage is one of the most important workplace rights. It is a fundamental that we value, respect and adhere to – always. We employ 2,820 colleagues, we are committed to paying them all fairly and legally and we have a strong track record of investing in our people.”

The Government revealed that it is trying to send a message to employers to let them know that if they break the law they will face tough consequences. Plans include increasing fines so that an employer underpaying ten employees could face penalties of up to £200,000, as outlined in the Queen’s Speech last week. Under current rules however, the 25 businesses face penalties of just over £21,000, as employers can only face maximum fines of £20,000 irrespective of the number of employees affected.

Between them, the 25 businesses accounted for a mere £43,000 of the £4.6m that HM Revenue and Customs says was owed in arrears to people working for less than the minimum wage over the past year. However, while 25 employers have been ‘named and shamed’, a Premier League football club has escaped being named for underpaying workers.

It was revealed that the football club made staff pay for their uniforms and also made deductions for travelling time, and as a result had to pay arrears of more than £27,500 to 3,000 workers.

Furthermore, a recruitment agency, which HMRC also chose not to name, was ordered to pay more than £167,000 after classifying some workers as unpaid interns.

When questioned as to why HMRC would not publish the names of the football club or recruitment firm, a spokesperson stated:

“HMRC has strict rules about taxpayer confidentiality, so we would only name businesses in exceptional circumstances.

“In this particular instance, the decision was taken not to name the businesses specifically.”

The decision not to explicitly name these employers has come under scrutiny, while the naming of certain businesses in the list of 25 has also been criticised, as explained by HSS.

With HSS already seeking legal advice on its position, it remains to be seen whether any other companies on the list will do the same. It appears that the Government may have to rethink its strategy about ‘naming and shaming’ companies in the future if this is to be the outcome following the release of any list.

The national minimum wage currently stands at £6.31 for workers aged 22 and above, £5.03 for those between 18 and 20, and £3.72 for employees under 18.

If you are in the same position as HSS Hire or believe you have been included on the list unfairly but for a different reason, please let us know. Having seen the list and heard from HSS, are you concerned that you need to change certain things to ensure you will not flout minimum wage laws and potentially incur huge fines in the future?

Provide us with your views and feelings on this in our latest forum discussion group here.