HR · 16 August 2017

Small businesses continue to be named and shamed by government

Named and shamed businesses
Hairdressing businesses accounted for a surprising 25 per cent of all named and shamed companies

The government’s efforts to ensure no British workers are underpaid by their employers has resulted in a number of small businesses being named and shamed.

As part of a trend dating back to 2013, 230 new companies have been named and shamed for underpaying 12,176 British workers a total of £1.46m.

The most notable inclusion this time is Argos, which joins the likes of French Connection, Foot Locker Conde Nast and H&M as companies found to have underpaid.

The high street retailer took the decision to announce the shortcomings itself in February after an HMRC investigation found that Argos’ previous owners, before Sainsbury’s took over in September 2016, had failed to pay staff during colleague briefings and security searches.

Business Advice contacted Argos and found out that Sainsbury’s has made a “number of positive steps” in terms of colleague pay and benefits since acquiring Argos. It introduced a two per cent pay increase for all Argos store colleagues and increased the basic rate of pay for Band 2 store colleagues from £7.20 to £7.66.

According to official figures, since 2013 the government’s naming and shaming efforts have identified 1,200 employers which failed to pay 40,000 staff £6m in wages. These companies have been fined a total of £4m.

Of the prolific offenders in the most recent list, Fusion Hairdesign, Nunthorpe Nurseries and Vong’s Welcome were three small businesses to feature.

Fusion Hairdesign, based in London, underpaid six staff an average of £4,058.82 while Vong’s Welcome only left one employee out of pocket, but to the tune of £18,575.34.

Top ten offenders in latest list

  1. Argos: £1.46m underpaid to 12,176 employees
  2. Pearson Anderson: £49,800 underpaid to 169 employees
  3. Fusion Hairdesign: £24,352 underpaid to six employees
  4. Nunthorpe Nurseries Group: £22,831 underpaid to 118 employees
  5. Vong’s Welcome: £18,575 underpaid to one member of employees
  6. Maughan Microcomputers: £15,010 underpaid to three employees
  7. Islington Accommodation Services: £14,447 underpaid to one member of employees
  8. Afters: £14,142 underpaid to one member of employees
  9. Rudan: £14,141 underpaid to seven employees
  10. Kenvig’s Hair Marriott: £9,698 underpaid to two employees

Retail, hairdressing and hospitality businesses were among the most regular to be named and shamed, with common errors committed by small companies found to be failure to account for overtime hours, wrongly paying apprentice rates tow brokers and docking pay for uniforms.

Business minister Margot James said: “It is against the law to pay workers less than legal minimum wage rates, short-changing ordinary working people and undercutting honest employers.

“Today’s naming round identifies a record £2m of back pay for workers and sends the clear message to employers that the government will come down hard on those who break the law.”

Named and shamed by region

  • North West of England: 36
  • Yorkshire and Humber: 31
  • London: 20
  • Scotland: 19
  • South East of England: 18
  • West Midlands: 18
  • Wales: 17
  • East Midlands: 16
  • South West of England: 16
  • North East of England: 15
  • East of England: 14
  • Northern Ireland: 13

HM Revenue & Custom’s Melissa Tatton said the department is committed to recouping the wages of underpaid workers and will continue to “crack down” on offenders. “Those not paying workers the National Minimum or Living Wage can expect to face the consequences.”

Find out why the Living wage challenge is continuing to put pressure on small businesses.

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ABOUT THE EXPERT

Hunter Ruthven was previously editor of Business Advice. He was also the editor of Real Business, the UK's most-read website for entrepreneurs and business leaders at the helm of growing SMEs.

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