B&Q, NHS and Five Guys underpayment cases highlight the importance of accurate payroll
This Payroll Week, recent enforcement action from the Government provides a timely reminder of just how important accurate payroll is.
This September, the Government named 658 employers after investigations found that workers had not been paid the correct National Minimum Wage. In total, almost £4 million was repaid to more than 27,000 workers, with employers also facing penalties totalling around £7 million.
The businesses named range from large retailers and NHS organisations to care providers, hospitality businesses and other employers.
And importantly, not all of the cases involved a deliberate attempt to underpay staff.
Payroll errors can be surprisingly complex
B&Q, for example, was found to have underpaid more than £456,000 to 4,530 workers. The company said the shortfalls were unintentional and related to the way geographical allowances were calculated. The affected employees were subsequently paid in full.
Five Guys was also among the businesses named. Almost 3,700 workers were found to have been underpaid by a total of £54,642.47. The company attributed the issue to technical differences in how payroll regulations had been applied, following an HMRC review.
There was also a technical compliance issue involving St George’s, Epsom and St Helier Hospital Group, relating to salary sacrifice arrangements and how certain amounts were treated when calculating minimum wage.
These examples demonstrate that payroll compliance isn't always as straightforward as checking that someone’s hourly rate looks correct.
The calculation of minimum wage can be affected by factors including hours worked, age, apprenticeships, deductions, allowances, salary sacrifice arrangements and other elements of pay. Some payments, such as tips and service charges, cannot be included when calculating minimum wage, while certain deductions can affect the calculation.
The consequences of getting it wrong
Underpaying an employee can have serious consequences for a business, even when the mistake was accidental.
Employers are responsible for making sure their workers receive at least the legal minimum wage. Where an underpayment is identified, the arrears must be repaid and employers can also face financial penalties and being publicly named.
There is also the practical impact to consider. For an employee, even a relatively small payroll error can make a real difference to their household finances. If an issue affects hundreds or thousands of employees, the financial and administrative implications for the business can quickly become significant.
And then there is the impact on trust.
Employees need to be confident that their employer is paying them correctly, on time and in accordance with their employment terms and the law.
Payroll is about much more than pressing 'run'
Payroll can sometimes be viewed as a straightforward administrative task. In reality, it involves a significant amount of legislation, calculations, deadlines and employee information.
Employers need to ensure that changes to rates of pay, working hours, overtime, holiday, sickness, benefits, deductions and other payments are correctly reflected in payroll.
The National Living Wage for employees aged 21 and over is currently £12.71 per hour, with different minimum rates applying to younger workers and apprentices from April 2026.
Keeping accurate records is also essential. Employers must retain records demonstrating that they have paid the correct minimum wage, and HMRC can request records as part of its checks.
A timely reminder during Payroll Week
Payroll Week is an opportunity to recognise the people responsible for making sure employees are paid accurately and on time, but it is also a good opportunity for employers to take a closer look at their own payroll processes.
Are your employee details up to date?
Are you using the correct National Minimum Wage and National Living Wage rates?
Are overtime, allowances and deductions being treated correctly?
Are salary sacrifice arrangements being considered correctly when checking minimum wage compliance?
Are changes to employee pay and working patterns being communicated to whoever runs your payroll?
And, perhaps most importantly, do you have the time and expertise to keep up with the rules as they change?
The latest enforcement action shows that payroll errors can happen even within large and established organisations. Getting payroll right isn't simply about avoiding penalties. It is about making sure your employees receive the pay they are entitled to and giving both employers and employees confidence that payroll is being handled correctly.
Need support with your payroll?
At Mascolo & Styles, we understand that payroll can be time-consuming and increasingly complex. We can take care of your payroll requirements, helping you meet your responsibilities and ensuring your employees are paid accurately and on time.
If you would like to discuss your payroll requirements, get in touch with the Mascolo & Styles team and we can provide you with a quote for our payroll services.
