Lessons from B&Q’s recent underpayment of National Minimum Wage.

National Minimum Wage (“NMW”) compliance is firmly back on the enforcement agenda. With the Fair Work Agency (“FWA”) now bringing together responsibility for key areas of workers' rights enforcement, employers face increased scrutiny of their pay practices.

The Government's latest naming and shaming serves as a reminder that failure to pay NMW can result in substantial financial liability, regulatory scrutiny and unwelcome publicity. Whilst NMW breaches are often associated with employers paying low rates of pay, many cases arise from technical issues relating to payroll practices and the calculation of working time.

In this article, we consider why B&Q was shamed for underpaying its staff and explore some of the most common causes for underpayment of NMW.

What happened at B&Q?

On 3 September, the Government published its latest list of employers that had failed to pay workers the NMW: “Short-changing staff isn't a shortcut to success” - Nearly 660 employers announced as failing to pay the minimum wage - GOV.UK. The naming and shaming exercise forms part of the Government's ongoing commitment to enforcing NMW compliance and holding employers to account where breaches are identified.

B&Q was listed and had underpaid £456,934.72 to 4,530 of its workers, the highest amount identified in this naming round. The company attributed the shortfalls to its calculation of geographical allowances.

B&Q was far from alone, however. 658 employers were named in total with around £4 million to be repaid to more than 27,000 workers, with financial penalties totalling £7 million imposed.

Whilst naming rounds of this nature are not new, this was the first to take place since the establishment of the FWA in April 2026. Created to bring workers' rights enforcement under one roof, the FWA is expected to play a significant role in ensuring compliance with employment protections, including NMW obligations going forward. Whilst HMRC currently enforces NMW compliance, for the FWA, responsibility for enforcement is expected to transfer fully to the FWA from April 2027.

Common causes of NMW underpayments

The Government’s Educational Bulletin ("Bulletin") provides general statistics on NMW breaches: Educational_Bulletin_R24.docx.

The 658 employers named this month were given the opportunity to explain the reasons for their underpayments. Whilst some employers reported multiple causes, the most common reason, accounting for 39% of cases, was deductions or reductions which brought workers' pay below the NMW.

The Bulletin also found that 34% of employers failed to pay workers correctly for their working time, whilst 16% failed to pay the correct NMW rate to staff, for example, to account for age changes or rate increases in April each year. 

Other causes of breaches included:

• employers not paying workers correctly for their working time, such as travel time, pre or post shift work, mandatory training and overtime;

• errors relating to worker status, including where individuals were incorrectly treated as self-employed, volunteers or unpaid interns; and

• apprentice underpayments resulting from misclassification.

These findings demonstrate that NMW breaches frequently arise from payroll administration, working time calculations and worker categorisation issues, rather than from a deliberate decision to pay workers below the applicable NMW rate. Employers should therefore ensure that their pay practices are regularly reviewed to avoid these common pitfalls.

Why is compliance so important?

The financial consequences of NMW breaches can be significant. In addition to repaying wage arrears to affected workers, employers may face financial penalties and costs associated with investigating and correcting historic payroll issues. Where underpayments affect large numbers of workers or continue over an extended period, liabilities can quickly escalate, as demonstrated by the £7 million in financial penalties imposed on the 658 recently named employers.

Employers also face reputational damage by being named. The Government has repeatedly acknowledged in successive policy statements that some employers are more likely to respond to the social and economic sanctions that may flow from details of their payment practices being made public, than from financial deterrents. For charities and other third sector organisations for whom reputation and public trust are particularly important, the consequences of being publicly named may extend beyond any immediate financial impact.

As touched on above, the enforcement landscape is also evolving to focus on workers' rights and their enforcement. Employers should therefore review their pay arrangements proactively rather than wait for complaints or investigations to identify any potential issues.

Key learning points for employers

1.Review pay arrangements regularly

Employers should review pay arrangements whenever new allowances, benefits, salary sacrifice arrangements or other changes to remuneration are introduced. As the B&Q example demonstrates, NMW issues can arise from the way pay is calculated rather than from the headline hourly rate itself.

2.Ensure all working time is identified and paid appropriately

Employers should regularly review whether all working time is being captured and paid correctly, including training, travel time, meetings, pre and post shift activities, such as handovers, and other activities that may fall outside scheduled hours.

3.Pay particular attention to higher-risk worker groups

Additional care may be required where organisations engage apprentices, casual workers, seasonal workers, student workers or individuals working under atypical arrangements. Employers should ensure that worker status and pay arrangements are reviewed regularly to minimise the risk of inadvertent underpayments.

4.Maintain adequate records

Employers' records must be sufficient to demonstrate that workers have received at least the NMW for each pay reference period. Records may include details of payments, deductions, hours worked and proof of wage payments. Employers should also ensure that NMW records are retained for the required period. Since 1 April 2021, employers must retain records created from 1 April 2021 onwards for 6 years, and any records required to be kept under the 3-year requirement on 1 April 2021 also need to be retained for 6 years.

5.Take a proactive approach to compliance

Regular reviews of payroll processes, working time arrangements and record-keeping practices can help identify issues before they develop into significant financial, regulatory or reputational liabilities. Employers should not wait for a complaint or investigation before reviewing their arrangements.

Employers may find it useful to review the Calculating the minimum wage - A checklist for employers - Guidance - GOV.UK guidance, which highlights common causes of underpayment and provides links to more detailed guidance on each risk area.

 If you would like to discuss any aspect of this article further, please contact our Employment team on 0113 244 6100. 

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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website.

Specific advice should be sought for specific situations. If you have any queries or need any legal advice, please feel free to contact Wrigleys Solicitors.