HMRC is cracking down on businesses that shortchange their workers, including many big names.

Nearly 500 companies have been hit with over £10 million in fines for failing to pay the national minimum wage. Around 42,000 employees will be reimbursed a combined total of £6 million. The message from the government is clear: cutting corners on pay is not just bad ethics … it’s illegal.

Among those named and shamed by HMRC were major employers like EG Group, Centrica and Holland & Barrett. Most claimed “technical issues” or “historic payroll errors” were to blame. But whether it’s a spreadsheet mishap or outdated policy, the impact is the same: people being short-changed for their work.

Business Secretary Peter Kyle said: ‘Every worker deserves a fair day’s pay for a fair day’s work.’ It’s a sentiment most people would agree with. However recent findings suggest too many employers are not meeting expectations by:

• Paying the wrong rates to apprentices.
• Failing to count training time, prep time, or uniform requirements as paid work.
• Miscalculating deductions or salary sacrifice schemes.

Even well-intentioned businesses can trip up. Payroll compliance isn’t simple, but it is compulsory. With the new Fair Work Agency launching next year to tighten enforcement, it’s time for every employer to meet its payroll obligations.

There’s another influential area employers can’t afford to overlook: tips. The Tipping Law (effective October 2024) makes it crystal clear … employers must pass 100% of tips to workers. Crucially, tips cannot be used to increase pay to the minimum wage level. Every penny of base pay must meet legal thresholds before tips are factored in.

In hospitality, retail, and service industries, this is a major compliance test. HR teams need to lead the way by ensuring payroll systems, contracts, and management training all align with the new regulations.

Employers should also be mindful that the minimum wage is likely to rise again in April 2026, estimated to increase from £12.21 per hour to £12.71, an increase of 4.1%.

‘Fair pay is more than following the law. It involves trust, reputation and looking after the people who keep the business running,’ says Emma Clack of Heneom HR, the HR services company based near Stevenage and Welwyn in Herts. ‘The government’s crackdown should be a nudge – or maybe a shove! – to review your pay practices now. After all, if your people can’t trust you to pay them fairly, why should they trust you at all?’

Are your HR practices looking after your employees properly?

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