Agency That Failed to Pay the National Minimum Wage Hit Hard In Pocket

Paying the National Minimum Wage (NMW) is a strict legal requirement and employers that fail to do so can be hit with punitive penalties. In one case, an employment agency that laid on thousands of underpaid workers at a warehouse received a six-figure fine.

Following an investigation by HM Revenue and Customs (HMRC), it emerged that workers who clocked on one minute late to work were docked a full quarter of an hour. After clocking off at the end of their shifts, they were also required to queue for an average of 11 minutes for security checks.

The agency accepted that, as a result of those unpaid periods, workers had not received the NMW. To make up the difference, it paid almost £470,000 to affected workers. It was also required to pay a total of £263,628 in respect of 13 penalty notices raised by HMRC. It was, however, permitted to pay half the penalties – £131,814 – because it remitted the sum promptly, within 14 days.

After the agency appealed against the penalties to an Employment Tribunal (ET), HMRC acknowledged that the notices were defective in that they did not include certain information, particularly the names of individual workers concerned and the amounts by which they had been underpaid.

In dismissing the agency’s appeal, however, the ET found that the notices were nevertheless valid. The agency knew precisely the figures on which the notices were based, did not dispute that workers had been underpaid and had agreed how much was owed to them. The penalties were designed to have a deterrent effect on others and HMRC had been entitled to issue multiple notices.