Government Intensifies Enforcement of National Minimum Wage Compliance

The UK government is ramping up its enforcement efforts against violations of the National Minimum Wage (NMW) as part of a renewed focus on protecting workers’ rights. This initiative has been bolstered by a substantial increase in the enforcement budget for HM Revenue and Customs (HMRC), which has doubled to £27.8 million since the 2015-2016 fiscal year.

A recent report from the Department for Business and Trade (DBT) highlights the positive outcomes of this enforcement push, revealing that over 108,000 workers received back pay after investigations uncovered non-compliance with NMW regulations. HMRC has successfully closed nearly 3,200 cases, with approximately 900 of those revealing unpaid wages. The report emphasizes the agency’s strategic use of the Geographical Compliance Approach (GCA), a targeted three-tiered enforcement strategy aimed at ensuring that employers in specific regions adhere to NMW laws.

Under the GCA framework, employers are encouraged to voluntarily rectify NMW arrears. However, should issues continue, HMRC is empowered to impose penalties of up to 200% of the outstanding wages owed. As part of the GCA expansion in 2024, three additional regions—including Liverpool, East Midlands, and another yet to be announced—will be incorporated into the enforcement strategy, following earlier additions of areas such as Belfast, Cornwall, and Watford.

Kyle Newton, Head of National Minimum Wage at Azets, commented on the findings, stating, “The sheer scale of HMRC enforcement highlights how widespread NMW non-compliance is. Businesses must review their payroll records and ensure they are adhering to the rules before they face unexpected penalties and reputational damage.”

The government’s message is clear. The DBT reiterated its commitment to enforcing minimum wage laws across all sectors, stressing the importance of compliance. This increased enforcement aligns with a growing awareness among workers regarding their rights, driven in part by initiatives like “Check Your Pay,” which has equipped millions of employees with knowledge about their entitlements.

With predictions of an increase in the minimum wage rate to over £12 per hour by April 2025, businesses are urged to proactively ensure NMW compliance. Employers who neglect to address discrepancies in pay or working time practices may face severe repercussions, including the potential for public naming by HMRC.

As HMRC intensifies its enforcement activities, it is essential for businesses to review their payroll controls and seek professional guidance to mitigate both financial and legal risks. With the government prioritizing NMW compliance, businesses must act swiftly to avoid the consequences of non-compliance in an evolving regulatory landscape.