HMRC NMW enforcement powers and penalties


HMRC can bring a claim on behalf of workers in the employment tribunal to recover NMW arrears. Workers can ask for HMRC support by calling the Acas Helpline. With the worker’s agreement, the complaint can be referred to HMRC NMW compliance officers.



HMRC can also enter premises, inspect records, interview employers and pass information on to workers. HMRC can issue an underpayment notice requiring payment of any arrears within 28 days. Employers can appeal to an employment tribunal. When issuing an underpayment notice, an HMRC enforcement officer must also serve a penalty notice.



HMRC maximum fines for NMW non-payment doubled from 1 April 2016 to 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 periodically “names and shames” non-payers in a press release. 




Non-payment of the NMW, failure to keep records and making false records are criminal offences. Prosecutions are rare. 




HMRC targets its enforcement activity on areas of the economy most prone to NMW abuse such as social care (see box on page 94), retail, hairdressing and beauty and child care.


In January 2017, a new regulator, the Director of Labour Enforcement, took over strategic responsibility for NMW enforcement by HMRC. New sanctions, called Labour Market Enforcement Undertakings, are intended to target employers that persistently break employment laws, including NMW non-payment, with the potential for up to two years’ imprisonment and/or an unlimited fine.



Unions want increased funding, to enable HMRC to recruit more compliance officers and conduct targeted NMW awareness programmes, including visits to schools and colleges. A report by the National Audit Office in 2016 on NMW compliance indicated that the number of workers owed arrears more than doubled in the year to 2015-16, reaching over 58,000, while the scale of arrears more than trebled to £10.3 million.