Businesses warned over minimum wage compliance

Leading legal expert Sandeep Leighs, from law firm Shakespeare Martineau, reacted to the latest announcement from the Department of Business and Trade concerning minimum wage compliance. He emphasised the ease with which businesses can inadvertently breach minimum wage laws, noting “this shows just how easy it is for businesses to fall foul of minimum wage law – despite it being a legal requirement for over 25 years.” The implications of non-compliance can be severe, as Leighs pointed out that even well-known companies are facing reputational damage while dealing with financial penalties and the obligation to backdate pay for underpaid employees.

Leighs further elaborated on how financial repercussions could significantly impact organisations, especially those with large workforces heavily reliant on minimum wage. He stated, “For organisations with large workforces on minimum wage, the financial consequences of getting this wrong could be significant.” Common errors contributing to wage miscalculations often arise from employers making deductions for job-related expenses or failing to accurately track working hours. Mistakes like these can lead to workers being unpaid for essential activities, for instance, “not paying workers who have to arrive for their shift 15 minutes before it begins to change into PPE or who have to spend time handing over.”

To mitigate these risks, Leighs stressed the importance of having an effective payroll system in place to ensure accurate pay calculations. He also advised employers to confirm they are applying the correct wage band, whether National Minimum Wage or National Living Wage, and to implement mandatory increases each year beginning on 1 April. For those uncertain about compliance, Leighs pointed out, “there is a calculator on the Government’s website that employers can use.”

Furthermore, Leighs recommended that “all employers should incorporate regular pay reviews and have policies in place to ensure no employee falls through the cracks.” He concluded with a call to action for businesses to act promptly if underpayment occurs, urging them to “rectify the situation and implement or improve procedures to ensure it doesn’t happen again.”