Over £4.6 million in wage arrears has been paid to more than 22,000 workers following a successful year for HMRC’s National Minimum Wage (“NMW”) enforcement teams.
New figures show that, in 2013/14, HMRC found arrears in almost half of the 1,455 investigations they carried out which resulted in a recovered average of £205 per worker. The rate of arrears is the highest since the National Minimum Wage was introduced in 1999.
Examples of underpayment cases where HMRC has taken action in the past year include:
• A Premier League football club was ordered to pay arrears of over £27,500 to over 3,000 workers after it made deductions for uniforms and travelling time for staff working in hospitality.
• A social care provider found to have not paid its staff for travelling time and other hours worked was told to repay over £600,000 in arrears of wages to almost 3,000 workers.
• A recruitment agency was ordered to pay over £167,000 to workers, including some it had classified as unpaid interns.
• A multi-outlet retailer, which required its employees to attend work before and after opening hours without pay, was ordered to repay almost £77,000 to more than 1,300 workers.
Paying less than NMW is illegal yet some umbrella companies still pay their employees a salary below minimum wage and then make up the difference with travel and/or subsistence expenses. The processed expenses reduce the amount of tax and NI payable which means that the employee sees nothing unusual about their take home pay. However, this puts this employment agency at the risk of investigation by HMRC and future tax liabilities.
To avoid such risk, the best advice to an agency is to seek the guidance of an established, qualified and audited company that is a member of the Freelancer and Contractor Services Association (FCSA).