Minimum wage changes: HMRC crackdown & actions to stay compliant

The latest minimum wage increases, alongside intensified HMRC and government enforcement, mean employers must account for every minute worked, including preparation and mandatory tasks. Failing to factor in activities such as sanitising, putting on protective clothing or completing pre-shift duties can lead to accidental underpayment.

Recent rises in the National Minimum Wage have brought more employees within the scope of enforcement checks. Employers who rely on outdated pay scales or overlook pre-work activities risk breaching statutory requirements. This is especially relevant for roles involving safety equipment or preparation time, as these periods must be fully paid.

Government steps up enforcement on underpayment of minimum wages

A significant increase in investigations has resulted in hundreds of UK employers being publicly named for failing to pay lawful wage rates. The combined arrears involved amount to millions of pounds, and penalties have increased accordingly. This shift reflects a broader move towards more visible and assertive enforcement.

With the introduction of the Fair Work Agency expected in 2026, employers should anticipate a more streamlined yet rigorous oversight system. The government’s wider agenda centres on ensuring workers receive the pay they are legally entitled to, regardless of sector or business size.

Regional pressure: spotlight on the North West

Specific regions have come under intensified scrutiny, including the North West, where dozens of employers were singled out for wage underpayments by HMRC. These cases covered a wide range of industries, from hospitality and retail through to manufacturing and care.

This regional focus highlights that underpayment is not limited to isolated or small operations. It often arises from inconsistent time-tracking, incorrect assumptions about what counts as working time, and also outdated wage structures. As data-sharing between enforcement bodies increases, regional investigations are becoming more precise and proactive.

Why minimum wage underpayment still happens: common pitfalls to avoid

Many employers underpay unintentionally due to misunderstandings around working time. Tasks such as preparing equipment, carrying out hygiene steps, or completing security procedures must be counted as paid time. Over weeks and months, these overlooked minutes accumulate into substantial wage shortfalls.

Other causes include deductions for uniforms, tools or other job-required items. Even small deductions can reduce pay below the minimum wage threshold for staff on entry-level rates. If salary sacrifice is in place, Minimum wage must be maintained after any sacrifices made. Additionally, failure to apply updated minimum wage rates each April remains a recurring source of non-compliance.

Practical examples: where extra working time must count towards minimum wage

In manufacturing environments, staff may need to arrive early to change into protective equipment or complete sanitisation routines. These activities are part of the job and must be included as paid time to avoid breaching minimum wage rules.

In hospitality and retail, typical unpaid duties include preparing tills, checking stock levels, and setting up display areas. Post-shift cleaning, cashing up and mandatory training also count as working time. Care workers frequently experience unpaid travel between client visits or waiting periods that should legally be recognised as paid hours.

What employers should do now to avoid problems

To ensure compliance, employers should review their timekeeping systems to confirm that all working time is recorded and paid. Pre-shift and post-shift duties should be clearly outlined in internal procedures, with payroll records reflecting actual hours worked.

Regular audits can help identify and correct discrepancies promptly. in addition, employers should also ensure wage rates are updated annually and confirm that no deductions bring pay below the legal minimum. Clear documentation and transparent communication with staff help maintain compliance and also reduce risk.

Minimum wage – employer compliance checklist

• Record all working time: Include preparation, PPE, sanitising, pre-shift, post-shift, waiting and also travel time.
• Update pay rates promptly: Adjust annually each April and when employees move to new age brackets.
• Review deductions: Ensure salary sacrifice, uniform or equipment costs do not lower pay below NMW.
• Audit systems: Check time-tracking accuracy and examine overtime patterns.
• Maintain clear documentation: Keep detailed policies and payroll records.
• Conduct regular internal reviews: Identify risks for staff close to minimum wage.

Alexander & Co payroll services

Alexander & Co offers dependable PAYE and payroll support to businesses throughout Manchester, London and across the UK.

As an add on service (typically when also providing accountancy services), our specialist payroll team handles the day-to-day administration that keeps your workforce paid correctly and on schedule. This includes preparing payslips, managing HMRC reporting requirements, administering pension auto-enrolment and dealing with statutory entitlements.

Whether you run a small enterprise or are expanding your operations, we provide compliant, efficient and cost-conscious payroll solutions shaped around your organisation. By outsourcing to our team, you can reduce administrative pressure, strengthen compliance and focus on running your business.

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