Employers should take note of the latest National Minimum Wage (NMW) enforcement action. The newly established Fair Work Agency has published its first major “naming and shaming” list, identifying around 660 employers found to have underpaid workers. According to the Government, more than £4 million has been repaid to over 27,000 workers, with approximately £7 million in financial penalties imposed on employers.
The publication serves as a timely reminder that National Minimum Wage compliance remains a significant enforcement priority for HMRC and now the Fair Work Agency. Employers found to have breached the rules face not only the cost of repaying arrears, but also substantial financial penalties and the reputational damage that comes with public naming.
The consequences of getting it wrong
Many employers are surprised to learn that NMW compliance is not simply about paying an hourly rate above the statutory minimum.
HMRC investigations routinely uncover underpayments arising from issues such as unpaid working time, deductions made for uniform, equipment or other deductions reducing pay below NMW, salary sacrifice arrangements, failure to apply age-related rate increases and miscalculating working time.
Employers should also understand how to ensure National Minimum Wage compliance, particularly where deductions, working hours and pay arrangements can create unexpected breaches.
Where HMRC identifies a breach, they may investigate employers looking back over the previous 6 years. If a Notice of Underpayment is then issued, employers may be required to:
- Repay arrears to affected workers (calculated based on the current years’ NMW limits).
- Pay financial penalties of up to 200% of the underpayment (subject to statutory limits).
- Face a formal Notice of Underpayment.
- Be publicly named by the Government.
Importantly, the Government has stated that it intends to publish naming lists more regularly going forward, meaning employers may face public scrutiny much sooner after an investigation concludes.
A changing enforcement landscape
This latest publication is particularly significant because it is the first naming round since the creation of the Fair Work Agency, established in April 2026 to bring together various employment rights enforcement functions under one body. The Agency has made clear that robust enforcement of minimum wage legislation remains one of its key priorities.
Although HMRC currently continues to undertake much of the enforcement activity, employers should expect continued scrutiny and a coordinated approach to worker rights enforcement in the coming years.
Employers reviewing enforcement risks should also consider the Employment Rights Act changes affecting employers, as wider employment law reforms may require updates to workplace policies and procedures.
Are particular sectors being targeted?
One striking feature of the latest list is the visible patterns, suggesting HMRC select particular sectors to investigate.
For example, a comparatively high number of nursery and childcare providers appear. Aaron & Partners had previously received anecdotal evidence this sector was being targeted and now a review of the published data suggests that nearly 40 nursery, preschool and childcare organisations were named.
The childcare sector has several characteristics that can make NMW compliance particularly challenging:
- High use of younger workers and apprentices.
- Salary sacrifice arrangements linked to childcare benefits.
- Staff purchasing uniforms or other work items.
- Additional unpaid time spent opening, closing or preparing facilities.
The prominence of nurseries on the latest list may indicate that HMRC has been paying particular attention to this sector. While enforcement is complaint-led in many cases, HMRC has historically undertaken targeted activity in sectors where it considers there to be a higher risk of non-compliance.
The childcare sector is not the only area that stands out.
The latest list also contains a significant number of employers in:
Care and healthcare
Care providers, nursing homes, home care businesses and NHS organisations feature heavily throughout the publication.
Hospitality, leisure and retail
Restaurants, holiday operators, cinemas and retail businesses are also strongly represented. Named employers include Five Guys, McDonald's franchise operators, Forest Holidays, Merlin Cinemas and B&Q.
Recruitment and outsourced services
Recruitment businesses, facilities management providers and contractors appear repeatedly throughout the list, reflecting the compliance challenges that can arise where pay arrangements and working time are complex.
What should employers do now?
The key message is simple: do not assume compliance merely because headline hourly rates exceed the National Minimum Wage.
Employers operating in childcare, social care, healthcare, hospitality, retail and labour-intensive service sectors should consider carrying out a proactive review of their NMW arrangements. Areas that frequently cause difficulty include deductions, working time, apprenticeship pay, salary sacrifice arrangements and the treatment of training time.
A voluntary compliance audit can often identify issues before HMRC does, allowing employers to correct problems, reduce risk and avoid becoming the subject of enforcement action.
Where potential underpayments or enforcement concerns have been identified, obtaining specialist employment law advice for employers can help businesses understand their obligations and respond appropriately.
How we can help
National Minimum Wage compliance is a technical area of employment law enforcement. Even employers acting in good faith can find themselves facing substantial liabilities where payroll processes have not been reviewed for some time.
Our Employment Law Solicitors regularly advise employers on National Minimum Wage compliance. If you would like to review your current arrangements or discuss NMW risks within your organisation, please get in touch.
Key Contact
Michael Redston
Employment Law Senior Associate Solicitor
Michael is a Senior Associate Solicitor for the Employment team and provides advice on both contentious and non-contentious matters.
