Several businesses have recently received correspondence from HMRC offering an ‘Employer Support Call’ to review their workers’ wages.
This comes as HMRC and the Department for Business and Trade have intensified their enforcement of the National Minimum Wage (NMW) and National Living Wage (NLW) and are proactively contacting employers to identify potential underpayment before launching formal investigations.
In March 2026, the government published details of its latest NMW enforcement round: over 385 employers across the UK were publicly named for failing to pay their workers the legal minimum wage. Together, they were ordered to repay over £7.3 million in wages owed to around 60,000 workers, and faced a further £12.6 million in financial penalties.
The consequences of ignoring this contact could be severe: financial penalties of up to 200% of the underpaid amount (capped at £20,000 per worker), repayment of arrears going back up to six years, and public naming on a government list. With a new, more powerful enforcement body launching in April 2026, the pressure on employers is only set to increase.
From 7th April 2026, enforcement responsibility moves to the newly established Fair Work Agency (FWA), created under the Employment Rights Act to consolidate workers’ rights enforcement for the first time. It brings together HMRC’s NMW enforcement team, the Employment Agency Standards Inspectorate, and the Gangmasters and Labour Abuse Authority into a single, unified regulator.
The Fair Work Agency will not only enforce minimum wage compliance but will also investigate holiday pay failures, sick pay compliance, and labour exploitation; significantly broadening the scope of what could be scrutinised. Its powers include workplace inspections, demands for records, civil penalties, and the ability to take legal action on behalf of workers directly.
What is the HMRC employer support call?
HMRC has been writing to employers across the UK as part of a proactive enforcement campaign around minimum wage compliance. The correspondence typically offers an Employer Support Call; a conversation with HMRC to identify and address any risks of underpayment before a formal investigation is triggered.
Receipt of this letter is a signal that HMRC already has reason to believe there could be a compliance issue with a business’s payroll, whether deliberate or accidental. The letter makes clear that declining the support call is not without consequence. Employers who choose not to engage risk:
- A formal HMRC investigation into their payroll records
- Financial penalties on top of any wage arrears owed
- Public naming by the Department for Business and Trade
Why National Minimum Wage compliance is complex
Many employers assume that compliance simply means paying at or above the current NMW or NLW rate. In reality, it is considerably more technical than that, and this is the reason why so many businesses find themselves inadvertently in breach.
The rules affect a wide range of workers: part-time employees, agency workers, apprentices, trainees, casual labourers, probationers, disabled workers, agricultural workers, and even foreign or offshore workers employed by a UK business. Getting the right rate for the right worker type is the starting point, but far from the whole picture.
The way pay is calculated for NMW purposes depends on the worker’s classification; salaried, time worker, output worker, or unmeasured for example. The rules about what counts as qualifying pay differ between these categories. Many employers classify their staff incorrectly, which creates knock-on compliance problems that can be costly to unwind.
The most common errors that lead to underpayment
Based on established patterns in HMRC enforcement activity, the following are the most frequently identified causes of NMW breaches. Many are entirely unintentional, but that does not reduce the liability.
Deductions and charges that reduce effective pay
This is one of the most widespread and costly risk areas. When employers make deductions from a worker’s gross or net pay; for meals, DBS checks, personal protective equipment, savings clubs, till shortages, or salary sacrifice arrangements, those deductions can bring the effective hourly rate below the minimum wage threshold. This is particularly acute for workers who are paid at or only slightly above the NMW/NLW rate.
Salary sacrifice schemes, including pension contributions, are a particularly common culprit. Where a worker opts to exchange part of their salary for a non-cash benefit, if their remaining pay falls below the minimum wage, the employer is in breach, regardless of whether the arrangement was voluntary.
Clothing and uniform requirements
Where an employer requires workers to wear a specific uniform or clothing that the worker must source and pay for themselves, this can constitute a deduction that reduces NMW-qualifying pay. Even prescribing that workers wear particular items, such as black trousers or a specific style of shoe, can create a liability if the cost falls on the employee. This has resulted in enforcement action against a number of well-known retail and hospitality businesses.
Unpaid working time
Time that is not captured or paid can quickly accumulate into a significant underpayment. Common examples include:
- Security bag searches at the start or end of a shift
- Time spent changing into or out of protective clothing or uniforms
- Pre-shift system log-ins or equipment set-up time
- Mandatory training; including induction training before a contract is formally offered
- Handover periods between shifts
HMRC takes the view that any time a worker is required to be at the employer’s disposal, even if they are not actively performing their core duties, is working time for NMW purposes.
Clocking systems that round down
Automated time and attendance systems that round shift times down, even by a few minutes, can create a systematic underpayment across a large workforce. HMRC is alert to this and will examine time-recording systems closely during an investigation. If your payroll system rounds down to the nearest quarter hour, for example, workers could consistently be paid for less time than they actually worked.
Travel time
There is an important distinction between travel on the job, which is working time and must be paid, and travel to the job, which generally is not. This becomes more complex for workers who travel directly from home to a client’s premises, or who cover multiple sites in a day.
Getting this wrong is a well-documented cause of NMW breaches.
Failure to apply annual rate increases
Each April, NMW and NLW rates increase. Employers who do not update their payroll systems promptly, or who overlook the requirement to uplift pay for specific worker categories, can fall into breach from the first day of the new rate year. Similarly, when a worker has a birthday that moves them into a higher NMW age band, their rate must be updated.
Salaried workers exceeding their contracted hours
Workers on a fixed annual salary are entitled to be paid at least NMW for every hour actually worked. If salaried staff regularly work beyond their contracted hours without additional pay, and the effective hourly rate falls below NMW as a result, the employer is in breach. This is a particular risk in sectors where long hours are normalised, such as hospitality, care, and retail management.
Apprentice pay errors
Apprentices have a specific NMW rate that applies during their first year of an apprenticeship, or if they are under 19 throughout. After this point, they must be paid at the standard NMW rate for their age. Employers who apply the apprentice rate for too long, or who misclassify the stage of an apprenticeship, are a recurring source of enforcement cases.
Current National Minimum Wage rates (from April 2026)
It is worth confirming the rates that applied from April 2026, which represent an increase on the previous year:
- Age 21 and over (National Living Wage): £12.71 per hour
- Age 18 to 20: £10.85 per hour
- Under 18: £8.00 per hour
- Apprentices (first year, or under 19): £8.00 per hour
For workers aged 21 and over, this represents an annual pay increase of around £900 for those in full-time employment. If your payroll was not updated to reflect these rates from the start of April, you may already be in breach.
Penalties for getting it wrong
Even where underpayment is entirely unintentional, HMRC will still require full repayment of arrears, charge interest, and issue financial penalties. The penalty structure is:
- 200% of the total underpayment identified
- Minimum £100 per notice of underpayment
- Maximum £20,000 per worker
HMRC can look back up to six years from the date a notice of underpayment is issued. In cases where a business has a large workforce paid at or near the minimum wage, even a small systematic error can produce a very large total liability when scaled across many workers and multiple years.
Beyond the financial cost, businesses that are publicly named face reputational damage that can affect staff recruitment and retention, customer confidence, and commercial relationships. With the government now committing to naming employers more frequently, the reputational risk is greater than ever.
Why you should accept the HMRC Support Call
We strongly recommend engaging with HMRC’s Employer Support Call. Engaging proactively signals to HMRC that you take your obligations seriously. It demonstrates a willingness to identify and correct issues voluntarily, which can favourably influence how HMRC handles any findings.
How Ormerod Rutter can help
Minimum wage compliance is genuinely complex, and the consequences of getting it wrong are serious. We can work with you to:
- Review your current payroll for NMW compliance risks across all worker categories
- Check that April 2026 rate increases have been correctly applied
- Assess your worker classifications to ensure the correct rates and rules apply
- Identify potential issues with deductions, salary sacrifice arrangements, and uniform policies
- Review your time-recording and clocking systems for rounding or unpaid time issues
- Prepare documentation and help you structure your response ahead of the HMRC support call
- Liaise with HMRC on your behalf throughout the process if required
Whether you have already received HMRC correspondence or simply want to make sure your payroll is in good shape ahead of this new enforcement environment, please get in touch with us on 01905 777600 or email hello@ormerodrutter.co.uk.
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