Retail organisation Argos has topped the list of 233 employers named by the Department for Business, Energy and Industrial Strategy (BEIS) for failure to pay employees the national minimum wage and living wage.
Argos failed to pay £1,461,881.78 to 12,176 employees. In February 2017, Argos announced that it would provide back pay to 37,000 current and former store employees after they were found to have been paid below the statutory national living wage rate prior to December 2016. The back pay amounted to approximately £64 per employee.
The underpayment was discovered during a routine HM Revenue and Customs (HMRC) investigation following Sainsbury’s acquisition of Argos in 2016. The cause of the underpayment was found to be related to the timings of colleague briefings, which often occurred before an employee’s shift started, and due to security searches, which could happen after an employee’s shift had finished. Argos has since introduced new processes to avoid a repeat of the issue.
Recruitment organisation Pearson Anderson is second on the government's non-compliance list for failing to pay 169 staff a total of £49,800.41, and hairdressing business Fusion Hairdesign is next for its failure to pay £24,352.90 to six employees.
The BEIS scheme, which has been in effect since October 2013, names employers who have underpaid staff by paying them less than the national minimum wage and living wage rates. Organisations that feature on the published list are required to back pay arrears of wages to affected employees, but employers can also face financial penalties of up to 200% of arrears, capped at £20,000 per employee, or prosecution in the most serious cases.
Employers on 2017’s list have been fined a record £1.9 million in total, and more than 13,000 UK employees are expected to receive back pay.
Deducting money from wages to pay for uniforms, failing to account for overtime hours, and wrongly paying apprentice rates to employees, were among the most common reasons for non-compliance among employers on 2017's list.
Other organisations that feature on the list include Nunthorpe Nurseries Group, which failed to pay £22,831.38 to 118 staff, and Maughan Microcomputers, which trades as Console Doctor, received failed to pay three employees a total of £15,010.89.
Since the scheme’s introduction in 2013, £6 million has been paid in back pay to 40,000 employees. A total of 1,200 employers have been fined £4 million overall.
The statutory national living wage is currently set at £7.50 for employees aged 25 and over. The minimum wage stands at £7.05 an hour for 21-24 year olds, £5.60 for 18-24 year olds, and £4.05 for 16-17 year olds. The minimum rate for apprentices is £3.50 an hour, which applies to those under the age of 19 or over 19 years old and in their first year of an apprenticeship scheme.
Margot James, business minister, said: “It is against the law to pay workers less than legal minimum wage rates, short-changing ordinary working people and undercutting honest employers.
“[The] naming round identifies a record £2 million 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.”
John Rogers, chief executive officer at Argos, said: "Shortly after we [Sainsbury's] acquired the Argos business last year it was brought to my attention that, as part of a routine visit, HMRC had uncovered an issue with some of Argos store systems and processes, which meant that some store [employees] had been paid below the national living wage. Sainsbury's prides itself on being a trusted brand where people love to work and I was, therefore, very disappointed to hear this and launched an immediate investigation. I am pleased to say the issue was resolved quickly and processes have been updated to ensure this cannot happen again."
