The number of whistleblowing reports relating to underpayment of the UK’s National Minimum Wage (NMW) has more than doubled over the last year, according to law firm Pinsent Masons.
Her Majesty’s Revenue & Customs (HMRC) received 6,027 whistleblower reports in the year to 31 March 2018, up from 2,573 in 2016/17, a rise of 134%. The dramatic increase was driven partly by the introduction of a new online complaints system in 2017, which made it easier for workers to report employers for potential breaches of NMW legislation, the law firm suggested.
The number of investigations opened by HMRC as a result of whistleblowing reports has also increased, rising by 43% from 2,775 in 2016/17 to 3,975 over the last year. HMRC identified that £15.6 million (US$20.33) was owed to more than 200,000 workers in back pay last year.
Pinsent Masons warned that some employers, particularly smaller businesses with limited HR resources, were being caught out by the complex NMW rules. Common errors include deducting money from pay for uniforms, paying apprentice rates to full-time workers and failing to properly account for overtime.
But Steven Porter, the law firm’s partner, also pointed out to HR Magazine that the ease of filing an online complaint meant there was now a greater chance of HMRC receiving spurious reports. This could result in compliant employers facing costly enquiries and substantial reputational damage, he warned.
"The consequences for employers of underpayment can be very serious. Clearly fines can be problematic, but the fact that the employer could be 'named and shamed' could potentially be much more damaging and could even result in a hit to revenues if customers go elsewhere as a result," he added. "Although it's clear that the rules are becoming more complex than first envisaged, HMRC will not see this as an excuse – having adequate resources in place to navigate the rules is essential."
NMW underpayment can trigger fines of up to 200% in arrears and, in some cases, lead to criminal prosecution.
Earlier this month, it was revealed that workers across the country were underpaid by almost 240 employers, which included care homes, car washes, pubs and football clubs. Individual businesses included the Odeon and UCI cinema group in Manchester, and Sussex and Durham Cricket clubs.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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The number of whistleblowing reports relating to underpayment of the UK’s National Minimum Wage (NMW) has more than doubled over the last year, according to law firm Pinsent Masons.
Her Majesty’s Revenue & Customs (HMRC) received 6,027 whistleblower reports in the year to 31 March 2018, up from 2,573 in 2016/17, a rise of 134%. The dramatic increase was driven partly by the introduction of a new online complaints system in 2017, which made it easier for workers to report employers for potential breaches of NMW legislation, the law firm suggested.
The number of investigations opened by HMRC as a result of whistleblowing reports has also increased, rising by 43% from 2,775 in 2016/17 to 3,975 over the last year. HMRC identified that £15.6 million (US$20.33) was owed to more than 200,000 workers in back pay last year.
Pinsent Masons warned that some employers, particularly smaller businesses with limited HR resources, were being caught out by the complex NMW rules. Common errors include deducting money from pay for uniforms, paying apprentice rates to full-time workers and failing to properly account for overtime.
But Steven Porter, the law firm’s partner, also pointed out to HR Magazine that the ease of filing an online complaint meant there was now a greater chance of HMRC receiving spurious reports. This could result in compliant employers facing costly enquiries and substantial reputational damage, he warned.
"The consequences for employers of underpayment can be very serious. Clearly fines can be problematic, but the fact that the employer could be 'named and shamed' could potentially be much more damaging and could even result in a hit to revenues if customers go elsewhere as a result," he added. "Although it's clear that the rules are becoming more complex than first envisaged, HMRC will not see this as an excuse – having adequate resources in place to navigate the rules is essential."
NMW underpayment can trigger fines of up to 200% in arrears and, in some cases, lead to criminal prosecution.
Earlier this month, it was revealed that workers across the country were underpaid by almost 240 employers, which included care homes, car washes, pubs and football clubs. Individual businesses included the Odeon and UCI cinema group in Manchester, and Sussex and Durham Cricket clubs.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
MORE ARTICLES THAT MAY INTEREST YOU
UK employers owe workers £1.44m in minimum wage violations
Sleep-in workers not entitled to minimum wage, rules UK appeals court
UK-Cyprus double taxation deal sees pension winners and losers
