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200 UK retail giants including WH Smith, Argos and Lloyds Pharmacy fined £7 million for minimum wage violations

By Nagasunder in UK Business & Employment News, posted June 21, 2023

Several prominent UK retailers, including WH Smith, Marks & Spencer, Argos, and Lloyds Pharmacy, are among more than 200 companies collectively fined £7 million for failing to comply with the legal minimum wage requirements.

The businesses have also been obligated to compensate around 63,000 workers with a total payout of £4.9 million.

Investigations by HMRC exposed violations ranging from workers being asked to cover uniform costs to incorrect payment of apprenticeship rates.

The list of offending companies spans fashion brands, car washes, hotels, and takeaway establishments.

The government asserts this enforcement action demonstrates companies neglecting proper staff payment will face repercussions.

The legal minimum wage for individuals aged 23 and above rose to £10.42 per hour in April, up from £9.50, with the absolute minimum hourly rate set at £5.28, applicable to apprentices or those under 18.

WH Smith topped the list of companies falling short in wage payments, with over £1 million owed to 17,607 workers, equivalent to £58 each.

The company stated the mispayment was identified during an HMRC review in 2019, revealing that WH Smith, along with other retailers, had misconstrued how statutory wage regulations applied to their store staff's uniform policy.

The company has reimbursed employees an average of £40 for clothing expenses.

A spokesperson said: “This was a genuine error and it was rectified immediately with all colleagues reimbursed in 2019,”

Lloyds Pharmacy ranked second on the list, owing over £900,000 to nearly 8,000 workers.

A spokesperson told The Guardian: “As soon as we were made aware of it we acted quickly to notify the affected colleagues and reimburse them. We also updated our uniform policy to ensure it did not recur.”

The underpayment was also described as unintentional and linked to the company's uniform rules. LloydsPharmacy promptly notified affected colleagues, reimbursed them, and updated its uniform policy to prevent a recurrence.

Marks & Spencer secured the third spot, with debts of just over £100 owed to 5,363 employees, totaling £578,000.

The retailer attributed the issue to an unintentional technical problem from over four years ago, specifically related to weekly payments for certain temporary workers.

Marks & Spencer rectified the situation as soon as it was identified and clarified that its minimum hourly pay has always exceeded the national minimum wage.

A spokesperson said: “This happened simply because temporary colleagues were not paid within the strict time periods specified in the national minimum wage regulations and was remedied as soon as we became aware of the issue.

“Our minimum hourly pay has never been below the national minimum wage, it is currently above it and no colleagues were ever underpaid because of this.”

Sainsbury’s, the owner of Argos, said its violation dated back to 2012 before the supermarket bought the catalogue chain. It had launched an investigation and corrected the problem when it was first identified in 2018.

A spokesperson said: “Since then we have completed the integration of Argos onto Sainsbury’s systems which will prevent this from happening again.

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“Since acquiring Argos, we have made a significant investment into colleague pay and the Argos colleague hourly rate is now aligned with Sainsbury’s, representing an increase of 53 percent over the last seven years.”

Kevin Hollinrake, the minister for enterprise, markets and small business, said while not all minimum wage underpayments were intentional, “there is no excuse for underpaying workers”.

He said: “Paying the legal minimum wage is non-negotiable and all businesses, whatever their size, should know better than to shortchange hard-working staff.

“Most businesses do the right thing and look after their employees, but we’re sending a clear message to the minority who ignore the law: pay your staff properly or you’ll face the consequences.”

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