The government has hit nearly 400 companies with £12.6 million in penalties after it found they had been underpaying workers. While many cases appear to be accidental, the businesses were ordered to repay money owed and pay fines, nonetheless.
Read on as we discuss the government-published document, outing the guilty organisations. We examine what they did wrong, the consequences for employers and their workforces, and how businesses can avoid similar consequences.
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Hundreds of Businesses Fined for Underpaying Workers
On 19 March 2026, the Department for Business and Trade published a document naming and shaming the hundreds of companies which had been found to have been underpaying workers. Among the organisations which had failed to pay the National Minimum Wage were:
- Norwich City Football Club, which had omitted to pay £99,021.76 to 1,152 workers,
- Hovis, which didn’t pay a combined £84,676.19 to over 100 individuals,
- Costa, which had failed to pay £149,851.25 to 2,759 staff,
- Bupa Care Services, which didn’t pay a total of £441,439.54 to nearly 9,000 of its workforce, and
- ISS Mediclean, which had underpaid £1,506,959.68 in total to 6,580 of its workers.
Combined, the nearly 400 companies—389 in total—have been ordered to repay more than £7.3 million to cover wages owed and support some of the nation’s lowest earners amid the current cost-of-living crisis. These organisations also face £12.6 million in penalties for underpaying workers, with roughly 60,000 individuals affected.
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Business Secretary Peter Kyle said on the matter, “The vast majority of businesses in this country do the right thing by paying their staff properly… It’s not fair on them when others are able to get ahead by not paying the wages their workers are owed.” He added that he looks forward to working alongside the new Fair Work Agency to ensure that the law is enforced and penalties are applied appropriately.
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What Caused the Issue
A number of reasons were attributed to the several businesses not paying their workers the minimum wage. Most commonly, underpayments were caused by wage reductions or deductions, such as salary sacrifice schemes or childcare costs, which brought an individual’s salary below the required threshold. This was indeed the case for 157 of the named employers. Other common reasons for issues included unpaid work, errors in apprenticeship rates, and incorrect worker status.
The Impact of Underpaying Workers
While organisations may not intentionally underpay staff, the impacts on workers can be significant all the same. Considering the current cost-of-living crisis, many people’s finances are stretched. And when consideration is also given to the fact that people often budget based on expected earnings, underpayments can lead to late payments, defaults, and more. Not only can this affect an individual’s credit score, or worse, but it can also give them unnecessary stress, which would likely have been avoided had the correct wage been supplied.
From an employer’s perspective, it’s crucial to avoid such circumstances. Workers impacted by underpayments may become less productive, and subsequent reputational damage could lead to staff turnover or difficulty recruiting. There’s also the risk of legal consequences, which are discussed more below.
Minimum Wage: The Law
By law, employers must pay staff at least the minimum wage rate, depending on a person’s age or apprenticeship status. Individuals aged 21 or over are entitled to the National Living Wage, currently £12.21 per hour, rising to £12.71 per hour from 1 April 2026.
For individuals aged 18-20 and under-18s/apprentices, their current minimum wage rates are £10 and £7.55 per hour, respectively. However, as with the National Living Wage, these minimum wage rates will increase on 1 April to £10.85 and £8 per hour, respectively.
Notably, work travel, mandatory training, and other elements can count as working time and/or impact one’s minimum pay. This was the case for many of the companies recently identified by the government for underpaying workers. If a business fails to pay the correct wage, it could be ordered to make future payments to make up for the underpayment and may face other repercussions, such as fines.
Employer Steps to Mitigate Risks of Underpaying Workers
Following the government’s naming and shaming of nearly 400 companies underpaying workers, it’s vital to reassess one’s practices and procedures to ensure future cases don’t arise. Most of the time, any underpayment is accidental, but intent doesn’t matter.
As has been shown, even if a mistake has occurred, the government will force organisations to repay wages owed and may even impose fines. Because of this, getting it right the first time is essential.
For employers, this means carefully assessing a person’s wages before they are made. Among other things, this includes:
- Clarifying a person’s employment status
- Remaining up to date with the latest minimum wage rates (these are typically reviewed and amended each year)
- Ensuring factors such as salary sacrifice schemes don’t take an individual’s pay rate below the minimum threshold
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If an employer has any queries or concerns regarding wages, it’s recommended to seek advice. This could come from an internal conversation with the payroll department or seeking external, specialist help. Whatever the case, if there’s a concern, advice could be the difference between remaining compliant and being hit with a fine.
Our Final Thoughts
Underpaying workers is usually not a company’s intention. But when it does happen, it can have significant repercussions for the individual and leave the employer legally vulnerable. Therefore, ensuring wages are paid correctly is not just good business practice but also essential to avoid legal consequences, reputational damage, and potential productivity declines.
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