Some of the UK’s best known retailers including WH Smith, Marks & Spencer, Argos and LloydsPharmacy are at the head of a list of more than 200 companies collectively fined £7m for failing to pay the legal minimum wage.
The businesses were also forced to pay out £4.9m to about 63,000 workers left out of pocket after violations of the rules were uncovered by inspectors at HMRC, varying from breaches related to asking workers to pay for aspects of their uniform to paying the incorrect apprenticeship rate.
The 200 companies included fashion brands, car washes, hotels and takeaway businesses.
The government said the decision showed that companies that did not pay staff properly would “face the consequences”.
The legal minimum wage for those aged 23 and over rose to £10.42 an hour in April, up from £9.50, with the absolute minimum hourly rate now £5.28, which applies to apprentices or under-18s.
WH Smith, which was at the top of the list of those that fell short on payments, was found to have owed 17,607 workers more than £1m, or £58 each.
The company said the mis-payment was identified as part of a 2019 review by HMRC, which found WH Smith, along with several other retailers, had misinterpreted how statutory wage regulations applied to uniform policy for store staff.
The group had asked workers to wear their own trousers, skirts or shoes in a specific colour, along with uniform it provided. WH Smith has paid them back an average £40 for money spent on the clothing items.
“This was a genuine error and it was rectified immediately with all colleagues reimbursed in 2019,” WH Smith said.
LloydsPharmacy, which was second on the list, was found to owe more than £900,000 to nearly 8,000 workers. It also said its “unintentional” underpayment related to company uniform rules.
A spokesperson said: “As soon as we were made aware of it we acted quickly to notify the affected colleagues and reimburse them. We also updated our uniform policy to ensure it did not recur.”
Marks & Spencer was third on the list of those found to have incorrectly paid workers, owing 5,363 employees just over £100 each, or £578,000 in total. The food-to-fashion retailer said it had been named because of an “unintentional technical issue from over four years ago” related to weekly payments for some temporary workers.
“This happened simply because temporary colleagues were not paid within the strict time periods specified in the national minimum wage regulations and was remedied as soon as we became aware of the issue,” it said.
“Our minimum hourly pay has never been below the national minimum wage, it is currently above it and no colleagues were ever underpaid because of this.”
Sainsbury’s, the owner of Argos, said its violation dated back to 2012 before the supermarket bought the catalogue chain. It had launched an investigation and corrected the problem when it was first identified in 2018.
A spokesperson said: “Since then we have completed the integration of Argos on to Sainsbury’s systems which will prevent this from happening again.
“Since acquiring Argos, we have made significant investment into colleague pay and the Argos colleague hourly rate is now aligned with Sainsbury’s, representing an increase of 53% over the last seven years.”
Kevin Hollinrake, the minister for enterprise, markets and small business, said that, while not all minimum wage underpayments were intentional, “there is no excuse for underpaying workers”.
“Paying the legal minimum wage is non-negotiable and all businesses, whatever their size, should know better than to shortchange hard-working staff.
“Most businesses do the right thing and look after their employees, but we’re sending a clear message to the minority who ignore the law: pay your staff properly or you’ll face the consequences.”
