As reported by Drapers last week, retailers should beware of HMRC who is taking action when they identify those who are failing to pay the national minimum wage. MatchesFashion.com was the latest fashion retailer to be ‘named and shamed’ by the Government, along with 69 other employers, for failing to pay two of its workers the National Minimum Wage, currently an hourly rate of £6.50 for those aged 21 and over, £5.13 for 18-20 year olds and £3.79 for under 18s. This is not the first time that a fashion retailer has fallen foul of the legislation. In January 2015, H&M was also named as having failed to meet the minimum requirements, which it blamed on a problem with time logging. Matchesfashion.com has similarly stated that the issue was caused by an administrative error and that it promptly paid out the amounts and voluntarily alerted HMRC.
The Government appears intent on ramping up its enforcement of the legislation, announcing plans to increase funding by a further £3 million to cover the cost of employing more compliance officers. In a statement, the Government said that “naming and shaming gives a clear warning to employers who ignore the rules, that they will face reputational consequences as well as financial penalties of up to £20,000 if they don’t pay the minimum wage” and described any failure to pay the minimum wage as “illegal, immoral and completely unacceptable”.
Whilst in this case MatchesFashion.com was only ordered to pay a fine of £93 for failure to pay £375.61 to two workers, the cost of reputational damage is undoubtedly far higher.