Millions in backpay and penalties highlight minimum wage risks for employers
Employers urgently need to review their workforces’ pay for compliance with National Minimum Wage rules, as the government names and shames those who have underpaid workers. The rules are “uncompromising”, and even technical errors can result in penalties and reputational damage years later, warns Julie Moore, a partner and National Minimum Wage (NMW) expert at professional services group S&W.
“Most underpayments we see are mistakes rather than deliberate, but that doesn’t help employers,” she said. “They face making potentially large back payments for pay, national insurance and pension contributions, as well as significant penalties.”
Naming and shaming employers who fail to comply with minimum wage legislation is a key plank of the government’s enforcement strategy. Previous lists have included several household names. The latest list names 518 employers who, together, have been required to repay workers over £7.4m in unpaid wages.
According to Moore, several of the names are the result of errors that were resolved long ago.
“Employers who want to do the right thing can easily make technical errors. Even if they remedy it and repay workers, they can then find themselves named and shamed on a list years later,” she said. “It may not seem fair, but it’s a reality employers have to deal with.”
An easy mistake to make
Recent rises in the NMW, including in April 2025, have pushed the UK’s minimum wage to among the highest in the world relative to average earnings, making it easier to fall foul of the regulations.
A 40-hour week on the main NMW rate now equates to over £25,000 a year.
“The rules are uncompromising,” warns Moore. “Even salaried workers can end up being inadvertently paid under the minimum if they participate in salary sacrifice arrangements or work just a small number of hours over their contractual hours, for instance.
Staying late, extra time taken to change into or out of work clothes or protective equipment before or after shifts and failures to take breaks, meanwhile, can push pay rates below the minimum.
Enforcement campaigns add to risk
Moore advises employers to ensure they’re entirely clear and transparent about how they calculate pay and make it easy for employees to check internally if they’re uncertain.
“Most enforcement cases result from employee complaints. Once a complaint is received, all the employer’s NMW compliance across the workforce will be reviewed. Even if the original complaint proves unfounded, the employer can find itself facing a review of its pay, uncovering failures from years ago,” said Moore.
“The government uses workers to police NMW compliance, and it’s proved extremely effective.”
The release of the list follows a recent campaign by the Department of Business & Trade to encourage workers to complain if they’ve not been paid correctly. The department sent half a million beer mats to pubs nationally, raising awareness of the recent National Minimum Wage rise. Distributed in areas that include those with high underpayment complaints, the mats prompt drinkers to check they’re paid correctly.
“Employers need to urgently assess their NMW risks, because if they don’t, someone else may reveal them,” said Moore.