Understanding the National Minimum Wage: Importance, Consequences and the ‘Name and Shame’ Programme

The National Minimum Wage (NMW) is a fundamental part of UK employment law. It ensures that workers receive at least the minimum level of pay they are legally entitled to for the work they carry out.

For workers, the NMW provides important protection against being underpaid. For employers, complying with the legislation is a legal obligation. The consequences of getting it wrong can be significant, not only financially but also in terms of a business’s reputation.

On 3 September 2026, the Government published its latest NMW “name and shame” list, revealing that 658 employers had failed to pay their staff the NMW. As a result, around £4 million is being repaid to approximately 27,000 workers with a further £7million in penalties. The latest figures provide a timely reminder that NMW compliance should be an ongoing priority for employers.

Why is the National Minimum Wage important?

The NMW is an important safeguard for workers, particularly those in lower paid roles. It establishes a legal minimum which eligible workers should not be paid below and helps protect workers from exploitation and unfairly low wages. However, NMW compliance is also important for employers. Paying staff correctly helps maintain trust and confidence in the workplace and can protect a business from financial and reputational consequences.

NMW compliance is not always straightforward. One common misconception is that compliance simply involves checking that an employee’s hourly rate is high enough. But, NMW calculations can be more complicated. Issues such as deductions from pay, salary sacrifice arrangements, working time, accommodation, apprenticeships and changes in a worker’s age or status can all affect whether the correct minimum wage has been paid. This means an employer can breach the NMW rules without deliberately setting out to underpay its staff. A payroll error, incorrectly applied deduction or misunderstanding of the rules can potentially result in an underpayment. Employers should therefore not assume that having an established payroll system automatically means they are NMW compliant.

What are the consequences of failing to pay the National Minimum Wage?

Where an employer is found to have underpaid workers, it may be required to:

• Repay the arrears owed to affected workers
• Pay financial penalties
• Deal with investigations and correspondence from the relevant enforcement authorities
• Potentially face significant reputational damage through the Government’s naming scheme.

The financial consequences can quickly become substantial, particularly where an underpayment has affected many employees or continued for a significant period. An employer does not necessarily have to deliberately underpay its workers to face consequences. While mistakes can happen, an honest mistake does not remove the obligation to pay workers what they are legally entitled to. Where an employer identifies a potential issue, taking prompt action to investigate and rectify it is therefore important.

The Fair Work Agency and NMW enforcement

The Fair Work Agency (FWA) was established in April 2026, bringing together enforcement functions relating to a number of employment rights. The FWA now has statutory responsibility for NMW enforcement, although HMRC is currently continuing to deliver NMW enforcement during the transition. HMRC has powers to investigate suspected NMW breaches, require employers to repay arrears owed to workers and impose financial penalties where appropriate.

The key message for employers is: NMW compliance must be treated as an ongoing responsibility, rather than something to consider if an investigation begins.

What is the ‘Name and Shame’ programme?

The Government’s NMW “name and shame” programme is designed to encourage compliance and deter employers from failing to meet their obligations. Under the scheme, employers that have been found to have breached NMW requirements can be publicly identified. The reputational consequences can be significant. Being publicly associated with underpaying workers can affect how a business is perceived by its employees, customers, suppliers and potential recruits.

The latest list, published on 3 September 2026, demonstrates that the Government continues to take NMW enforcement seriously, with hundreds of employers publicly identified and millions of pounds being repaid to workers.

What should employers do?

The latest naming round provides a useful opportunity for employers to review their own pay practices.

Employers should consider whether:

• Workers are receiving at least the correct NMW or National Living Wage rate
• The correct rates have been applied following the latest annual increase
• All relevant working time is being properly accounted for
• Deductions from wages or salary sacrifice arrangements could be affecting NMW compliance
• Apprentices are being paid the correct rate
• Changes in a worker’s age or status are being reflected in their pay
• Payroll, HR and management teams understand the NMW rules that apply to the workforce

Businesses should also consider whether their contracts, policies and actual working practices are consistent with the way employees are being paid.

If you are an employer and you discover a potential problem, it is sensible to take advice at an early stage. Understanding the extent of the issue, identifying affected workers and taking steps to correct any underpayment can help prevent a relatively small problem from becoming much larger and potentially quite costly.

How can Hopkins Solicitors help?

NMW compliance is just one part of an employer’s wider employment law responsibilities. At Hopkins Solicitors, our Employment Law Team provides practical advice to businesses on a wide range of employment and HR matters.

We can help employers understand their legal obligations, identify potential issues and take appropriate steps to address them. This can include reviewing contracts and policies, advising on pay and employment arrangements, supporting businesses with HR issues and providing ongoing employment law advice.

Our Hopkins HR service also provides businesses with ongoing employment law and HR support through our HR Retainer, giving employers access to advice whenever they need it.

If you are concerned that your business may have paid workers below the National Minimum Wage, or you simply want reassurance that your current arrangements are compliant, we can help you review your position and understand what steps may need to be taken. Reach out today by clicking the Request a Callback button below, or give us a call on 01623 468 468.