The naming scheme initially came into effect on 1 January 2011 and was revised on 1 October 2013. The objective of the scheme is to raise awareness of minimum wage enforcement and deter employers who would otherwise be tempted to break minimum wage law.
The scheme is not an alternative to prosecutions. Employers will not be publicly named under the scheme whilst prosecution proceedings are in hand or are being considered. Where a potential prosecution case is rejected by the Crown Prosecution Service, the employer will still be named. Those who are prosecuted will then also be named.
Revised naming scheme (from 1 October 2013)
The revised scheme applies to any employer that is investigated by HM Revenue & Customs (HMRC) and issued with a notice of underpayment from 1 October 2013 onwards. For cases in which an investigation commenced before 1 October 2013, the previous naming scheme criteria and process applies (see below).
If HMRC investigates an employer that is breaking minimum wage law they will be issued with a notice of underpayment by HMRC. This is a formal notice that sets out the arrears to be paid by the employer together with the penalty for non-compliance with the requirement to pay workers the minimum wage. An information sheet is given to the employer at the start of the investigation which sets out details about the Department for Business, Energy & Industrial Strategy (BEIS) naming scheme. The employer will have 28 days to appeal against the notice of underpayment issued by HMRC. See National Minimum Wage and Living Wage - notice of underpayment.
If the employer does not appeal or an appeal has been unsuccessful, HMRC will issue a case closure letter to the employer. HMRC will then refer the employer to BEIS for automatic naming under the scheme.
Exceptional circumstances to not be named
The employer will have 14 days from the date of the HMRC closure letter to make written representations to BEIS outlining whether they fall under any of the exceptional circumstances for not being publicly named under the scheme. The exceptional circumstances are:
- naming by BEIS carries a risk of personal harm to an individual or their family.
- there are national security risks associated with naming in this instance.
- other factors which suggest that it would not be in the public interest to name the employer.
In all cases where an employer makes representations to BEIS, the employer will need to provide evidence in support of their case for not being named. Details of where to send representations will be given in the case closure letter.
BEIS will normally expect to inform the employer of the outcome of any representations within 14 days of receipt of any representations made by the employer.
If, on receipt of representations from an employer, BEIS are satisfied that the employer should not be named under the naming scheme, no further action with regard to naming will be taken and the employer will be notified accordingly. The employer is still, however, liable to repay any outstanding arrears to workers and a penalty to the Secretary of State as applicable.
If BEIS do not receive any representations from the employer within 14 days of the date of the HMRC case closure letter or do not accept the representations made by the employer, the employer will be automatically named under the scheme via a BEIS press notice. BEIS will not maintain a public register of employers who have failed to pay the NMW or who have been named.
Original naming scheme (1 January 2011 - 30 September 2013)
For investigations commenced by HMRC for breaking minimum wage law between 1 January 2011 and 30 September 2013, the original naming scheme criteria and process is applied.
HMRC will refer cases to the BEIS under the naming scheme where they consider that one or more of the following criteria is met:
- There is evidence that the employer knowingly or deliberately failed to comply with their minimum wage obligations
- There is evidence that the employer has previously received advice from HMRC about the steps they need to take to ensure future compliance with national minimum wage and has not taken those steps
- There is evidence that the employer has failed to take adequate steps to keep or preserve minimum wage records
- There is evidence that the employer has delayed or obstructed a minimum wage compliance officer in the performance of their duties
- There is evidence that the employer has refused or neglected to answer questions put to them by a minimum wage compliance officer
- There is evidence that the employer has refused or neglected to provide information or produce documents to a minimum wage compliance officer
- There is evidence that the employer refused or neglected to pay arrears of the minimum wage to workers, following HMRC intervention, which has resulted in HMRC taking action against the employer to ensure payment of arrears to workers
HMRC will not refer cases to BEIS unless the total arrears owed to workers are at least £2,000 and the average arrears per worker are at least £500.