When we talk about minimum wage breaches, it’s easy to picture deliberate underpayments. But in reality, most employers want to do the right thing.
In the latest round of the government’s National Minimum Wage Naming Scheme, 491 employers across the UK were named as having made underpayments to their staff.
And the top causes of underpayment?
Not complex loopholes but just missed birthdays, forgotten rate rises and a few unpaid minutes here and there. These seem like minor omissions but the consequences of getting them wrong are costly.
So lets take a look at the hidden traps that can quietly pull you below the line.
Birthday pay rises
When an employee turns 18 or 21, their minimum wage rate changes from the very next pay reference period.
For example, if your payroll runs from the 15th to the 14th of the month and someone turns 21 on the 4th, the new rate kicks in from the 15th before their birthday – not the next month.
It’s an easy one to miss. But with 27% of breaches happening because employers didn’t apply the new rates (either for birthdays or April’s annual uplift), this is a reminder that even an overlooked note can become a compliance issue.
Top tip
Add key birthdays and rate change dates into your calendar with automated reminders.
Apprenticeship rates
Apprenticeships are brilliant for developing employees and employers, but the pay rules can be a little confusing. If your apprentice is aged 19 or over, they are only entitled to the apprentice rate during their first year. After that, they move to the age-related minimum wage rate.
In the latest findings, 28% of employers underpaid apprentices simply because they didn’t switch the rate after the first year of employment.
Top tip
Keep a simple spreadsheet or system flag at the beginning of the apprentice’s employment with a ‘rate switch date’. This will save a huge amount of stress!
The sleep-in shifts
Working time isn’t just the time someone is visibly on the shopfloor. It can include things like sleep-in shifts, mandatory training, trial shifts, and pre- and post-shift prep time.
If those minutes (or hours) aren’t paid, or if pay is rounded down, you can be accidentally dipping below the minimum wage threshold.
Details matter
Most minimum wage breaches aren’t acts of bad faith but are administrative hiccups. But the impact is the same: workers lose out, businesses risk their reputation and risk being publicly named with hefty penalties. Building a culture of fair pay means tightening up the small stuff – the dates, the hours, the classifications and making sure your systems keep pace with the ever-changing legislation. Because when it comes to compliance, the little things really do matter.
We can help
If you’re not 100% confident your payroll is fully compliant with the latest National Minimum Wage legislation, we offer a Payroll Health Check Service. This is a detailed review designed to highlight potential risks, identify underpayment issues before HMRC does and give you peace of mind. Whether you employ apprentices, shift workers or salaries staff, our team can help you verify that your pay processes meet all legal requirements and reflect best practice.
Get a health check or find out more
To find out more or book a health check, please contact our Head of Payroll Claire Proctor at claire.proctor@ct.me.
