Oxfordshire employers warned on minimum wage compliance

Azets, an international business advisory group with offices in Witney and Bicester, is warning Oxfordshire employers about the risks of breaching complex National Minimum Wage (NMW) regulations.

Even unintentional errors can lead to financial penalties, backdated payments, reputational damage, and criminal sanctions.

Jez Howson, employment tax partner at Azets, said: “Most employers are trying to comply with the regulations, but the rules are extremely detailed and technical.

“It’s often the seemingly minor issues around working time calculations, payroll deductions or employee expenses that create breaches.”

These warnings come after April NMW increases, raising hourly rates to £12.71 for those aged 21 and over, £10.85 for 18 to 20-year-olds, and £8 for 16 to 17-year-olds and apprentices under 19 or in their first year.

Mr Howson emphasised that even well-intentioned employers can make technical errors.

He said: “We have seen examples where call centre workers were effectively underpaid because employers failed to count the time employees spent on site preparing for call lines to open.

“Even ten minutes a day can create an underpayment issue and this can become a significant exposure when multiplied across a workforce over several years.”

He also warned about the risks of payroll deductions.

Mr Howson said: “Voluntary arrangements, such as Christmas savings schemes, where contributions are deducted directly from net pay, can unexpectedly take you below the minimum wage threshold for HMRC purposes.”

Employers may be required to repay arrears for up to six years, calculated at current NMW rates.

They could also face penalties of up to 200 per cent of the arrears owed, public naming, and other financial liabilities, including National Insurance and pension contributions.

HMRC currently investigates NMW complaints and enforces the legislation on behalf of the Fair Work Agency (FWA), which launched in April this year.

Once fully operational, the FWA will oversee a broader range of employment rights, including holiday entitlement, unlawful deductions, agency worker protections, and gangmasters licensing.

The agency will have powers to inspect business premises, interview staff, and examine payroll records, and can require employers to repay underpayments within 28 days.

Mr Howson advised employers to also focus on holiday pay calculations.

He said: “Holiday entitlement and pay is not always straightforward to calculate correctly and with the direction of travel from government to make it easier for workers to enforce their legal entitlements, businesses should act now to ensure robust compliance procedures are in place.”

He emphasised the importance of accurate record-keeping and detailed payroll reviews.

Mr Howson said: “Employers should review payroll processes, check working time calculations carefully and ensure they can demonstrate exactly how pay has been calculated.

“Record keeping is absolutely critical. If HMRC or the FWA challenge your processes, you need to be able to show clearly what you have done, why you have done it and how you concluded that workers were receiving their correct entitlements.”