Working Theory

by Michael Reed

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I do employment law for the Free Representation Unit.

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michael at workingtheory.co.uk

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Why is HMRC trying to make dissolved companies pay the NMW?

27 June 2014

A couple of weeks ago, I wrote about the 25 firms named and shamed by BIS for failure to pay the national minimum wage.

I pointed out that three of the 25 firms had between 2009-10. And that naming and shaming them years later seemed pointless. I also hoped that the rest of the list was not similarly aged, since it seemed unfortunate if it took so many years for employers to work their way through the system.

Caroline Lucas MP has since asked a parliamentary question about when the 25 firms who were named and shamed were first issued with a notice of underpayments. Jenny Willott MP, answering on behalf of BIS, replied that the first of these was in December 2013, with the rest happening Jan-February 2014.

This all seems odd.

It appears HMRC issued notices of underpayments to firms that had dissolved 3-4 years beforehand. Which seems even more pointless than trying to shame them.

While a notice of underpayment might lead to public shaming, its main point is to require an employer to pay their employee the underpayment (and a financial penalty to the government).1 Obviously, if the company has dissolved that isn’t going to happen.

Even leaving aside that issue, if HMRC are issuing notices of payment years after the relevant underpayments, its hardly an effective mechanism for making sure employees get paid what they’re supposed to.

I really don’t know what’s going on. Maybe the three dissolved companies are just a gremlin in an otherwise robust and effective system. But they do suggest that there might be something quite badly amiss with HMRC enforcement of the national minimum wage.

P.S. Naturally my other thought was to double-check my research at Companies House. You can confirm my working yourself by searching using their WebCheck system. Just to be sure, I also ordered the notification of the companies being struck off and dissolved, which I’ve made available below:

  1. s19/19A National Minimum Wage Act 1998.

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