HMRC should give more information about why it has named and shamed employers for non-compliance with the National Minimum Wage (NMW), a new report from the Low Pay Commission (LPC) has recommended.
The LPC has published a report into the scale and nature of non-compliance with the NMW. Although it welcomes the naming and shaming policy and acknowledges that it acts as a good deterrent, it argues that it does not offer any learnings for employers.
The report suggests copying a practice used by The Pensions Regulator (TPR), whereby compliance investigations are turned into guidance for employers allowing them to learn from others’ mistakes.
‘We recommend that government develops a similar approach to the Section 89 notices used by TPR for minimum wage compliance,’ states the report. ‘This might include guidance following a naming round setting out what the nature of the non-compliance was, focusing particularly on mistakes or technical errors. Individual employers would not need to be named in this guidance.’
Other recommendations put forward included undertaking naming rounds on a regular basis, increasing the publicity around any prosecutions and adding a ‘tick box’ declaration to payroll software, whereby the employer is asked to confirm that all of their staff are paid at the correct level to encourage compliance.
The report found that underpayment of wages is at its highest immediately after an uprating of the minimum wage, when as many as one in five low-paid workers aged 25 and over may actually be paid less than they are entitled to.
‘The LPC welcomes the recent increases in funding for HMRC’s enforcement of the minimum wage, and recognises the progress it has made,’ said Chair of the Low Pay Commission Bryan Sanderson. ‘However, we also think there is more the government could do to identify non-compliance and stop it happening in the first place.’
