HMRC recovery powers and penalties
 for employers who fail to pay NMW



HMRC can bring a claim on behalf of workers to recover NMW arrears. Workers can ask for support from HMRC by calling the Acas Helpline (which replaced the Pay and Work Rights Helpline). With the worker’s agreement, the complaint can be referred to HMRC national minimum wage compliance officers.


HMRC has the power to enter premises, inspect records, interview employers and pass information on to workers. If the employer is found to owe money, HMRC can issue an underpayment notice, requiring payment of arrears within 28 days. Most inquiries are settled when the employer receives the notice. Employers have a right to appeal to an employment tribunal. 



When issuing an underpayment notice, an HMRC enforcement officer must also serve a penalty notice.


HMRC penalties for NMW non-payment doubled from 1 April 2016. The fine is now 200% of the total arrears. The penalty halves if arrears are paid within 14 days. The minimum and maximum amounts of the fine are £100 and £20,000 per worker. 



HMRC also operates a “naming and shaming” policy which involves identifying non-payers in an HMRC press release. 



Non-payment of the NMW, failure to keep records and making false records are all criminal offences. Prosecutions are rare, but extra resources have been promised to fund improved enforcement against deliberate non-payers. 



HMRC also carries out targeted enforcement in areas of the economy most prone to NMW infringement such as social care, retail, hairdressing and beauty.


From the start of 2017, there is a new regulator in overall charge with strategic responsibility for HMRC’s role in NMW enforcement – the Director of Labour Market Enforcement. New sanctions, called Labour Market Enforcement Undertakings were created by the Immigration Act 2016 and are in force since 26 November 2016, targeting employers that persistently break employment laws, including non-payment of the NMW. These provide for up to two years’ imprisonment and/or an unlimited fine. The Gangmasters and Labour Abuse Authority also operates in this area (see Chapter 3). 



The Low Pay Commission has recommended a bigger formal role for third parties such as unions in assisting in NMW recovery, with a formal protocol on third party whistleblowing over NMW infringement and arrangements to provide feedback on the progress of cases. The government has agreed to consider this recommendation.