HMRC turns its sights on Scottish employers.

HMRC has announced that the next area of focus for National Minimum Wage (NMW) reviews will be Central and East Scotland.

HMRC enforces compliance with NMW using a geographical approach, focusing its efforts on a particular area of the UK. Its approach can range from light-touch interventions to an NMW ‘health check’, or even a full investigation. Many NMW interventions are prompted by worker tip-offs.

Falling foul of NMW rules can be very costly. HMRC can recover arrears of pay for up to 6 years, with repayments calculated at the current NMW rate. Penalties of up to 200% may also apply.

There’s also the risk of reputational damage, as HMRC retains the power to ‘name and shame’ employers who fail to comply.

Employers rarely intend to underpay NMW, but as the rates continue to increase it’s easy to fall foul of detailed rules that can lead to failures on what may appear to be technicalities. For example, small amounts of time being worked that isn’t being captured in payroll (e.g. clocking in) or deductions for uniform / dress code policies.

The government is raising awareness of minimum wage rules among white-collar workers, encouraging them to report underpayment. Creative tactics include placing NMW reminders on beer mats in pubs.

If you’d like to discuss whether there may be NMW risks in your organisation — and how to mitigate them — please contact the Dains Employment Services team.

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