Are all Companies Paying Employees the Minimum Wage?

- by Sarah Connelly

Did you know that nearly 350 businesses were paying employees below minimum wage? Read the shocking report and its effects here.

Close to 350 business in the UK were failing to pay employees the minimum wage. As a responsible lender, we help UK consumers get to payday safely – extending a helping hand when needed. Sadly, dishonest companies left many vulnerable citizens grappling for their next salary. This forced many of them to rely on short term online loans month after month. Payday loans and wage day advance loans are only supposed to be a short-term solution for emergencies. However, when people rely on them consistently, it can lead to a cycle of debt.

Are companies paying employees the minimum wage? Cashfloat

National Minimum Wage Abuse

The Department for Business, Energy and Industrial Strategy released the as part of their “naming and shaming” policy. The department exposes company corruption to the wider public.

Retail chain Debenhams was among the many companies named, having failed to pay £134,894.83 to more than 12,000 employees. The company responded to the report citing a “technical error.”

Employers within the retail, hospitality and hairdressing industries were the most prolific offenders of all. Hotels topped the list with 84 employers named.

Are companies paying employees the minimum wage? Cashfloat

Companies Shamed in Published Report

The thorough report named businesses both large and small that underpaid their employees. Some had failed to pay vast sums to multiple employees, while others failed to pay a single worker as much as £133.65.

In a statement released by the Government, Business Minister Margot James said the following:

“Every worker in the UK is entitled to at least the national minimum or living wage and this government will ensure they get it. “That is why we have named and shamed more than 350 employers who failed to pay the legal minimum. This sends a clear message to employers that minimum wage abuses will not go unpunished.”

Many have spoken out in favour of the government’s decision to name and shame companies. Others have described those named in the list as “just the tip of the iceberg.”.

Massive Companies not Paying Employees the Minimum Wage

While Debenhams topped this record-breaking list, many other exposed companies had underpaid their workers by as much as £55,000. These included Pembrokeshire Care Limited, Osteria San Lorenzo, Aviator Hotel, and Drivecheck Limited to name a few.

Are companies paying employees the minimum wage? Cashfloat

Some of the businesses named and shamed in this report have chosen to issue statements in response.

Debenhams blamed a “technical error in its payroll calculations, which resulted in an average under payment of around £10 per person to the affected colleagues…”.

They then went on to say,

“As a responsible employer, Debenhams is committed to the national minimum wage. As soon as we identified the error by a routine HMRC audit last year, we reimbursed all those affected. We apologised to all our colleagues affected and have taken steps to ensure it cannot happen again.”
Are companies paying employees the minimum wage? Cashfloat

Companies Responses to the Negative Publicity

The Beauty Temple, a Nottingham based beauty salon wrote, in a letter to the HMRC,

“We employ our workers and pay them at levels at or above the national minimum wage (when including commission). “As is normal within our industry we provide uniform to our staff, and to ensure that the uniforms are returned undamaged we take a £60 deposit which we refund upon a return of the uniform. The payments were taken initially when workers started and refunded upon return of the uniforms.

“We have not sought to conceal this issue from the HMRC. As soon as we noticed, we took advice and immediately set about rectifying the issue.”

Many of the other firms named in the report declined to comment.

Minimum Wage not adhered to for Outrageous Reasons

The excuses that many of these companies gave for not paying minimum wage were largely pathetic. These included using tips to top up pay, docking wages to pay for workers’ Christmas party, and making employees pay for uniforms out of their own salary. This may explain the rise in payday loans online taken each year over the Christmas period. Some businesses even claimed that they were unaware that the minimum wage applied to foreign workers. According to the Department for Business, Energy and Industrial Strategy, certain companies claimed that “It’s part of UK culture not to pay young workers for the first three months as they have to prove their ‘worth’ first.” Some outrageously claimed about certain workers that “she doesn’t deserve the national minimum wage because she only makes the teas and sweeps the floors.”

The Government has released statements in the past specifically noting that tips do not count towards the National minimum wage and even provide a voluntary “Code of Best Practice” for employers.



HM Revenue and Customs has now recovered arrears for many of the UK’s lowest paid workers and also has issued penalties worth around £800,000.

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HMRC Naming and Shaming Policy

This list marks a record-breaking number of companies named and shamed for not paying employees the minimum wage. Since the HMRC introduced its “naming and shaming” policy, more than 1000 companies have been found to be underpaying their staff by a total of £4.5 million. Not only that but the HMRC are now examining another 1500 companies.

When announcing the new campaign, the government also released some of the worst excuses by employers for failing to pay their workers properly. These included:

Are companies paying employees the minimum wage? Cashfloat

There have been those who are critical of the HMRC in the light of this recent report. UNISON general secretary Dave Prentis said,

“This list fails to shame the larger care firms who are equally guilty of denying staff a fair wage. Those in the spotlight today are just the tip of the iceberg. HM Revenue & Customs needs to get much tougher with more inspections to identify Scrooge employers. “When a care firm breaks wage laws, the chances are it’s likely to cheating more than just a handful of its workers. We must check pay records thoroughly, so all employees get the money they are owed. The government must insist that bosses stop duping staff with bafflingly complex payslips. Care companies must show workers how they calculate their pay and prove that at the very least they’re earning a legal wage.”

Minimum Wage UK

The current national minimum wage sits at £8.21 per hour for those aged 21-24. For those under 24, the minimum wage decreases incrementally depending on your age.

Are companies paying employees the minimum wage? Cashfloat

The issue of a living wage in the UK is something that has been hotly debated by economists, with many believing that it will increase productivity as well as make the UK a more fair and equal place overall. In a 2016 poll among economists carried out by the Financial Times, the results were split almost evenly down the middle.

The Wage Debate

Those in favour:

Those in favour claimed that it offers a more fair and stable distribution of wealth and makes capitalism for sustainable. Paul de Grauwe, professor of economics at the London School of Economics said,

“A minimum wage is a way to turn the tide. It will make capitalism more sustainable in the long run. It is a way to show a more human face of capitalism. In the long run, it will strengthen the system.”

Many employees who currently earn the existing minimum wage work in sectors that do not trade internationally, something many economists argue reduces any downside to raising the cost of labour in these areas thanks to the lack of international competitiveness. Professor of economics, David Cobham said,

“In popular terms, you and I can expect to pay a bit more for our espressos, and the people who make and serve them can expect to get a better standard of living, and that’s fine.”
Are companies paying employees the minimum wage? Cashfloat

Those not in favour:

However, there are those who say that a national living wage would be less beneficial to the nation as a whole, claiming that it would end up costing jobs, particularly outside London.

Nick Bosanquet, a professor at Imperial College, London said

“It will have less impact in London and much more in northern conurbations where there are the greatest productivity problems and the lowest rates of new firm creation. It is, in fact, a rise in compulsory costs on employers with the least ability to pay.”

Minimum Wage Increase

Despite the debate among economists, it seems that the government certainly views an increased living wage as something positive as it plans to raise the living wage in April 2017.

Following criticism that the enforcement system is not tough enough on employers, the government has launched a £1.7 million advertising campaign that encourages workers to make sure that they are receiving the minimum wage.

There has already been some criticism levelled at this campaign with David Prentis saying that it puts the onus on employees to make sure they their employers are being paid fairly.

“It’s also not right to put the burden on employees. Many will be nervous about querying their pay for fear of having their hours reduced or worse still getting the sack. Ministers must stop letting bad bosses off the hook. And if the government wants to spend money on tackling low pay, there are better alternatives – like real legal enforcement of the minimum wage to penalise unscrupulous employers and introducing a living wage low-paid workers can actually live on, a statutory minimum wage worthy of the name.”

At the end of the day, whether the minimum wage rises or stays put, employees need to understand that they have rights and are entitled to at least the legal minimum wage. If a company is not paying employees the minimum wage, you should report it quickly! No one deserves less!

To read about zero hour contracts and the pros and cons, click here.

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About The Author
Sarah Connelly
Sarah is an enthusiastic writer, blogger and an eager agent of change. After completing her degree in Computer Science in one of London’s esteemed universities, Sarah’s early career in programming left her creatively frustrated. Looked for a way to combine her creative and analytical side, Sarah’s search led her to Digital Marketing and now she writes content and code for Cashfloat. Sarah enjoys spreading awareness about common financial issues and the importance of money management. With her STEM background, Sarah believes strongly in ethical business management and consumer protection. in her free time, Sarah enjoys reading, watching movies and eating out. After all, #YOLO!
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