Avoid HMRC fines for minimum wage breach

They were also named and shamed. Fines totalling £1.3 million were levied, in addition to back pay awards of £1.1 million and let’s not forget the cost of reputational damage.

It is not a situation you want to find yourself in, but could you inadvertently be in breach of the minimum wage laws? Even large companies – Wagamama’s and TGI Fridays – were caught out in this latest purge. It is no coincidence that many of the companies were restaurants, catering venues or hair and beauty salons where staff are often on minimum wage.

Typically, these types of establishments have a dress code, for example requiring staff to wear black trousers, white top and black shoes, the sort of clothes all of us have in our wardrobe, but for HMRC this is a uniform and should be bought by the company.

The HMRC definition of a uniform is any specific clothing that you stipulate employees must wear. So, the cost of those clothes is deducted from the minimum wage payment and low and behold they have breached the regulations. They not only have to pay the back pay to the employee but HMRC will fine them 200% of the total amount owed to staff.

Understanding your pay period is an important aspect of getting this right. Whether you pay your employees monthly or weekly could make all the difference as to whether uniform costs take staff below the minimum wage. The solution is simple if this affects you. You either need to provide the uniform yourself or pay a reimbursement for the cost of the specific clothing.

For more information contact The HR Dept Eastbourne on 0845 6880324