Could there be such a thing as bad publicity?

P.T. Barnum, renowned circus owner, is associated with the phrase “There is no such thing as bad publicity”. Perhaps in the world of circus this rings true, but in the world of business, there is most definitely ‘bad publicity’ and the public naming of shaming of companies who are in breach of the National Minimum Wage Regulations appears to be just this.

The government has recently published its latest tranche of companies who have failed to pay workers the minimum wage, with 658 companies named. The exercise is part of the government’s strategy seeking to ensure companies’ compliance with their statutory obligations. It may be a surprise that it is not just small companies who find themselves on the name and shame list. Top of the list this time was B&Q, which was found to owe almost half a million pounds to some 4,530 employees, with Five Guys in ninth position, owing £54,642.47 to some 3,699 workers.

Minimum Wage Regulations

The National Minimum Wage Regulations came into force on 1 April 1999, and the rates of hourly pay have increased annually with effect from 1 April each year. The increases take effect from the first new pay cycle following the increase. This means that if 1 April falls within an organisation’s pay cycle, the increase is only effective from the start of the next one. The rate differs for apprentices; those under 18; those between 18 and 20 and finally for those 21 and above, with the top rate (for those over 21) now known as the ‘national living wage’. The current national living wage rate is £12.71 per hour of working time.

The National Minimum Wage Regulations apply to almost everyone doing work. All who are classed as ‘workers’ are entitled to receive the minimum wage rates. There are some limited exceptions, including people who are genuinely self-employed and those who are ‘genuine volunteers’, that is they have chosen to volunteer.

How do breaches arise?

In most cases, a company does not intend to breach the minimum wage regulations. Some of the common mistakes include deducting more money than is permitted from a worker’s wage through an agreed deduction scheme, which results in the wage dropping below the minimum wage. This might be through a lawful salary sacrifice scheme agreement, but it is always important to ensure that the deductions for such schemes do not inadvertently result in an unlawful breach of the minimum wage regulations.

Confusion can occur here as there are some otherwise lawful reductions to wages that can legally take the workers wage below the minimum wage, such as adjustment to recover a previous overpayment of wages or repayments of advances of wages, but it is important to ensure you check what the deduction is and how much can be taken before taking it.

Other common mistakes include not correctly identifying or calculating working time for example in relation to notoriously complex aspects such as on-call and sleep-ins. Simple administration and payroll errors can also be to blame; as can failing to identify an individual as a worker and failing to increase rates in line with the statutory increases, be that age band uplifts, apprentice rate increases or general increases to account for the statutory uplift each April.

Taking legal advice can assist with preventing mistakes.

Naming and shaming

The government first started naming and shaming companies that have not met their statutory obligations in relation to the national minimum wage in 2011, with a change in 2013making it easier to do so.

From April 2026 the baton has been passed to the Fair Work Agency (FWA) to oversee the enforcement of various statutory rights including the payment of wages in line with the minimum wage regulations.

If, at the start of an investigation into an organisation, which may commence following a complaint or of the FWA’s own volition, there is found to be a non-compliance with the minimum wage regulations, then a notice of underpayment will be issued. Even if a company resolves the matter after an investigation has begun, but before the notice of underpayment is issued, the notice will still be issued. Once a company is issued with a Notice of Underpayment then the name will be passed on to the Department for Business and Trade, to publicly list the company as being in breach of the minimum wage regulations.

There are only limited exceptions where a company will not be named and shamed, including where the arrears are less than £500 (though this can be lowered to £100 in some circumstances) and in most cases it would seem unlikely an exception would apply.

Other penalties

If an employer is issued with a Notice of Underpayment, the naming and shaming process is only part of the penalty. The organisation will also be issued with a penalty of 200% of the total underpayment, subject to a cap of £20,000 per worker identified as being underpaid. Where the sum would be less than £100 then a minimum penalty of £100 applies.

This is in addition to having to repay the underpayments, which will also be applied at the current rates of pay applicable to the individual who was underpaid rather than the rates that applied at the time of the underpayment. This means that if a worker has changed the age banding that applies to their hourly rate, then the entire underpayment will have to be paid at the individuals’ current rate and if the minimum wage rates have increased since the underpayment, the current rate will apply to the entire underpayment.

Taking action to avoid penalties

It is important to check your systems and processes to make sure that you do not fall foul of the minimum wage regulations’ enforcement regime. Some hints and tips for businesses to consider:

• Check that the correct hourly wage is being applied to each worker, and that all hours classed as working time under Working Time Regulations are accounted for and paid for.

• Check what deductions are being made and whether they fall within the category of deductions which can allow the hourly wage to go below minimum wage or not.

• Keep full records for 6 years at least, as (since 06 April 2026) that is how far back the government can look.

Comment

The latest list demonstrates that even big businesses with vast resources can be found in breach, so taking time to check payments to staff can prevent bigger issues down the line, with heavy penalties and worse, a public naming and shaming, which would indeed be ‘bad publicity’.

See our previous Insight about the work and strategy of the Fair Work Agency.

And the introduction of the obligation to keep records about Working Time compliance.