HMRC’s new National Minimum Wage (NMW) enforcement strategy is in full flow, offering a significant opportunity for employers that should not be overlooked.
In a nutshell, this year HMRC is adopting a more geographical compliance strategy as opposed to their usual sector-based approach with a nudge letter sequel.
Belfast, Bradford, and Birmingham up first.
These letters are essentially a heads-up that the Company is on HMRC’s radar and that there is an opportunity to rectify any NMW issues without incurring hefty penalties or public naming.
We are seeing the following steps:
✅ Letter 1 – HMRC provides the employer with an NMW checklist.
✅ Letter 2 – HMRC offers an NMW support call (approx. few weeks later).
❌ Letter 3 – HMRC issues an opening letter for a formal review (a few months later).
It is crucial that employers do not ignore these letters.
This is a very positive step from HMRC, but it must be approached with caution, as it also includes an information gathering exercise (letter 2) in preparation for the next stage, launching a formal review to verify that all NMW-related issues have been correctly addressed (arrears repaid to workers).
If, at this point (letter 3), HMRC identifies any underpayments, penalties of 200% of any underpayment and public shaming will be imposed.
To get ahead:
- Refrain from complacency; NMW rules are complex, and accidental mistakes are surprisingly common.
- Always have an NMW expert by your side.
- Take advantage of the opportunity to assess your policies and procedures.
- Consider what occurs in practice versus what is stated in policy documents.
- Address NMW weaknesses fully to minimise financial and reputational damage.
If you have any questions about these letters or need advice on what steps to take, do not hesitate to reach out.