National Living Wage and National Minimum Wage: government evidence on enforcement and compliance, 2021
Source: data.gov.uk (2022-05-23)

National Living Wage and National Minimum Wage: government evidence on compliance & enforcement. This report looks at the government’s evidence and analysis on the enforcement of National Minimum Wage and National Living Wage. This evidence helps monitor, evaluate and review minimum wage compliance and enforcement. It also has our response to the 2020 Low Pay Commission recommendations.   This evidence covers: 
estimated non-compliance with the minimum wage
routes to HMRC enforcement
enforcement operations
enforcement statistics

May 2022 
National Living Wage and 
National Minimum Wage 
Government evidence on enforcement and 
compliance 2020/2021 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
3 
 
Introduction  
This report outlines the Government’s enforcement of the National Minimum Wage during the 
2020/21 financial year. It presents key statistics and describes important trends shown in the 
accompanying excel tables, referencing the data throughout. It follows last year’s report, 
published in February 20211, covering activity during the 2019/20 financial year. 
The period covered by this report coincided with the Covid-19 pandemic, which had a very 
significant impact on some employers’ business activities, as well as on worker complaints and 
HMRC investigations. Despite this, HMRC continued to enforce minimum wage regulations, 
adopting a flexible approach in response to restrictions and in line with Government guidance.  
The Low Pay Commission regularly make recommendations to the Government on NMW 
enforcement. In their 2021 report, the LPC reviewed progress in some of the key areas of work 
they had focused on in recent years and expanded on some of the original recommendations. 
Included in this report is our response to the reviewed recommendations. 
Key Results 
Box 1: Summary of 2020/21 enforcement results 
 
 
 
 
1 Department for Business, Energy, and Industrial Strategy (2021a) 
 
 
2020/21 saw strong enforcement results in a year impacted by 
the Covid-19 pandemic  
HMRC closed over 2,700 cases with nearly 1,000 closed with 
arrears. 
 
£16.8 million in arrears were identified, for over 155,000 
workers. 
 
HMRC issued almost 580 penalties, totalling £14.1 million. 
 
Targeted enforcement concentrated on sectors least impacted 
by Covid-19, however every complaint received was 
considered regardless of sector. This allowed HMRC to 
continue their work, taking a flexible approach and ensuring 
all workers who were entitled to the NMW received the correct 
pay, whilst adapting to the challenges businesses were facing.  

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
4 
 
Box 2: Summary of 2020/21 educational activity 
 
 
 
 
 
 
 
 
 
 
Report outline 
The remainder of this report is structured as follows: 
Background ______________________________________________________________ 5 
The minimum wage rates ________________________________________________ 5 
Enforcement of the minimum wage _________________________________________ 5 
Enforcement in 2020/21 _____________________________________________________ 7 
Enforcement during Covid-19 pandemic _____________________________________ 8 
Promoting compliance ___________________________________________________ 9 
Targeted and complaint-led enforcement ___________________________________ 10 
Penalties, undertakings, prosecutions, and the minimum wage Naming Scheme _____ 12 
Focus Item: Work of HMRC’s Specialist Enforcement Teams (SET) ________________ 15 
Measuring non-compliance with the minimum wage ____________________________ 17 
Measuring minimum wage non-compliance in 2021 ___________________________ 18 
Analysis of workers with pay below the NLW/NMW ____________________________ 18 
Responding to the Low Pay Commission’s enforcement recommendations _________ 22 
References ______________________________________________________________ 25 
 
 
HMRC follow a “Promote, Prevent and Respond” approach, using a variety of 
techniques to promote awareness… 
 
 
 
 
 
 
        
Over 67,000  
mass emails 
opened 
Over 6,500 views 
of live Minimum 
Wage content 
(including 
webinars) 
Over 13,000 
views of pre-
recorded 
Minimum Wage 
content 
Over 408,000  
SMS sent 
In addition to this, HMRC also sent over 198,000 letters to employers and 
workers. In total, 771,000 employers and workers sought out further 
information in our comprehensive and refreshed guidance. 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
5 
 
Background 
The minimum wage rates 
The National Minimum Wage (NMW) was introduced in 1999, with the National Living Wage 
(NLW) introduced in 2016. The NMW and NLW (together referred to as the minimum wage) 
provide essential protection for the lowest paid workers, ensuring they are fairly paid for their 
contribution to the UK economy. 
The minimum wage sets a minimum hourly rate of pay that all employers are legally required to 
pay to their workers. Almost all UK workers are entitled to be paid at least the relevant 
minimum wage rate. The rate they are entitled to is dependent on their age and whether they 
are an apprentice2. Table 1 below shows the minimum wage rates that were applicable across 
the 2020/21 financial year.  
Table 1. Minimum wage rates (per hour) as of April 2020 and April 2021 
Age Band 
From 1st April 2020 
Age Band3 
From 1st April 2021 
25 years old and over 
 
£8.72 
23 years old and 
over 
£8.91 
21 to 24  
 
£8.20 
21 to 22 years old 
£8.36 
18 to 20 
£6.45 
18 to 20 years old 
£6.56 
16 to 17 
£4.55 
Under 18  
£4.62 
Apprentice 
£4.15 
Apprentice 
£4.30 
 
Source: HM Government (2021b)
Enforcement of the minimum wage 
Government is clear that anyone entitled to the minimum wage should receive it and is 
committed to taking robust enforcement action against employers who fail to pay their staff 
correctly. This ensures that workers receive the pay to which they are legally entitled.  
Her Majesty’s Revenue and Customs (HMRC) enforce the minimum wage on behalf of the 
Government.  HMRC proactively use a variety of methods to encourage compliance and 
enforce the legislation, based around a “Promote, Prevent and Respond” strategy.  
“Promote” is based on the idea that some instances of failure to comply with minimum wage 
legislation are due to insufficient information or understanding, rather than deliberate non-
 
2 See HM Government (2021a) for details of the workers entitled to the Minimum Wage, and exceptions to this. 
3 The upper age band was extended to include workers aged 23 years and over with effect from 1st April 2021. 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
6 
 
compliance by an employer. The key aim is to improve the information available to employers 
on the assumption that employers will comply with the law once they understand their 
obligations. Employers who do not respond to compliance measures will be subjected to full 
enforcement action. 
“Prevent” is based on the principal that some employers will deliberately underpay, balancing 
the potential benefits of underpaying workers against the risk and consequences of being 
caught, and that some employers will be incentivised into checking that they are compliant. 
The prevent strategy aims to alter employers’ behaviour by highlighting the risk and 
consequences of failing to comply. 
“Respond” is triggered when HMRC identify non-compliance, either as a result of a worker 
complaint, or as a result of their targeted enforcement work that draws on HMRC intelligence 
and risk analysis. 
 
Once an underpayment has been identified, HMRC will issue a notice of underpayment (NoU) 
which requires the employer to pay the arrears back to workers within 28 days. In addition to 
this, in almost all cases HMRC will take full enforcement action resulting in the imposition of 
penalties and Naming by the Department for Business, Energy and Industrial Strategy (BEIS) 
on Gov.uk4.  In more serious cases, HMRC will be able to seek a Labour Market Enforcement 
Undertaking or Order and, in the most serious cases, it may pursue a criminal prosecution.  
 
The budget for enforcement and compliance has nearly doubled since the introduction of the 
NLW, increasing from £13.2 million in 2015/16, to £27.5 million in 2020/21. The increased 
budget provides for more HMRC compliance officers to look into worker complaints, undertake 
enforcement activity and, increasingly, promote compliance. It also takes account of the 
increasing number of workers brought within scope of the legislation as a result of increased 
minimum wage rates.  
 
 
 
4 Employers will only be eligible for Naming if the total value of arrears owed to workers exceeds £500.  

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
7 
 
Enforcement in 2020/21 
The 2020/21 financial year was a strong year for minimum wage enforcement despite issues 
caused by the Covid-19 pandemic. HMRC opened over 2,600 cases, and closed more than 
2,700, with nearly 1,000 of these closing with arrears. The proportion of closed investigations 
where employers are found to be non-compliant was 39% compared to 42% in 2019/20.  
Figure 1 below shows that HMRC identified £16.8 million in arrears for more than 155,000 
workers and issued 575 penalties totalling £14.1 million to non-compliant employers.  
Since 2015 there has been a substantial increase in the total arrears identified by HMRC with 
the 2020/21 figure exceeding all years prior to 2018/19, see Figure 1 below. This means that 
since the introduction of the NMW in 1999, the Government has ordered employers to repay 
over £156 million to around 1.3 million workers, issued over £73 million in financial penalties 
and completed over 84,000 investigations.  
 
Source: BEIS / HMRC enforcement data 
Notes: 
1. An additional 30 cases were originally closed in 2015/16 but the employer notified HMRC of additional arrears 
in 2016/17. The arrears in these cases are included in the arrears total for 2016/17. 
2.There are an additional 11 cases originally closed prior to 2018/19 which notified further arrears in 2018/19. 
These cases are included in the arrears total for 2018/19 
3.The SCCS arrears are included within this table. 
Figure 1. Minimum Wage investigations: arrears and workers identified 
0
50,000
100,000
150,000
200,000
250,000
300,000
£0
£5
£10
£15
£20
£25
£30
Total workers identified 
Total arrears identified (millions)
Arrears
SCCS Arrears
Workers

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
8 
 
4.There are an additional 8 cases originally closed prior to 2019/20 which notified further arrears in 2019/20. 
These cases are included in the arrears total for 2019/20. 
5. An additional 3 cases were originally closed prior to 2020/21 but the employer notified HMRC of additional 
arrears in 2020/21. The arrears in these cases are included in the arrears total for 2020/21 
 
Table 1 in the accompanying Excel data also shows that average arrears per case stood at 
over £6,000 in 2020/21, and that average arrears per worker was £108 – this figure has 
increased slightly compared to last year but is still consistent with the longer-term trend of 
declining average arrears per worker. This is in part due to the change in HMRC’s approach, 
which now takes account of non-compliance across an employer’s whole business, rather than 
just the specific worker who may have complained. Whilst this means employers can be fully 
compliant in the future and that more workers are reached, the arrears identified can vary 
significantly in value. 
Table 2 in the accompanying Excel data shows that in 2020/21, of the 997 cases closed with 
arrears, HMRC closed 15 cases which had over £100,000 in arrears each. Together, these 
cases reached a total of over £12.7 million in arrears and accounted for over 108,600 workers. 
This reflects HMRC’s efforts to enforce the NMW, protect workers and their rights and return 
arrears to workers as quickly as possible.  
Enforcement during Covid-19 pandemic 
The Covid-19 pandemic impacted on enforcement activity during the 2020/21 financial year, 
and as a result, HMRC revised their enforcement approach accordingly.  
Throughout the year, HMRC prioritised worker complaints to ensure that underpaid workers 
received their arrears as quickly as possible, initially focusing on completing ongoing 
investigations where compliance officers had already visited employers. Most new 
investigations were desk-based, with HMRC interviewing employers and workers by telephone 
where feasible, however face-to-face visits continued where it was appropriate to the NMW 
risks identified.  They also reviewed their targeted enforcement plans to focus on high-risk 
sectors while scaling back proactive enforcement in sectors such as hospitality and social care 
that were hit particularly hard by the pandemic. Given this, HMRC adopted a more flexible and 
dynamic approach when contacting employers and workers, particularly those in the hardest 
hit sectors, and allowed extra time for employers dealing with Covid guidelines and furloughed 
staff.  
HMRC also took the opportunity to focus more on “Promote” activity that aims to drive 
compliance by promoting better understanding of minimum wage regulations through new 
webinars and guidance. Over the course of 2020/21, HMRC facilitated 771,000 employers and 
workers to seek further information in relation to the minimum wage, including live webinars on 
minimum wage rate increases and on issues relevant to the social care sector. 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
9 
 
Despite adapting their approach, HMRC faced a number of challenges during the year as a 
result of Covid-19. The Coronavirus Job Retention Scheme (CJRS) meant that many low-paid 
workers were not working and were therefore not entitled to be paid at least the minimum wage 
leading to a reduction in the volume of complaints. This was likely compounded by workers 
being reluctant to complain due to concerns about losing their job. Employers were also 
reluctant to engage with HMRC at a time when their businesses were in financial and 
operational difficulty due to the changing nature of Covid-19 guidelines and laws. These 
challenges are reflected in the enforcement statistics for 2020-21 and will likely impact future 
statistics due to HMRC being able to investigate records from up to 6 years ago.  
HMRC have evaluated the innovations introduced when Covid restrictions were in force and 
used these to plan their future enforcement approach. This resulted in the introduction of the 
New Compliance Approach in 2021/22 which seeks to improve compliance by increasing 
communication between HMRC and businesses, promoting and supporting self-correction 
where possible. The underlying theory behind this approach is discussed further in the 
‘Promote’ section. In addition, HMRC’s evaluations highlighted that the online delivery of 
training for HMRC enforcement officers was a success and resulted in more cost-effective and 
timely training opportunities.  
Promoting compliance 
Promote activity aims to prevent non-compliance by changing the behaviour of employers and 
workers. Both BEIS and HMRC carry out communications activity to raise awareness of the 
minimum wage regulations and encourage compliance.  
HMRC’s minimum wage ‘Promote’ team carry out a variety of work to achieve this, by working 
with employers to put them in a position to be compliant, encouraging workers to check their 
pay in line with the minimum wage legislation and signposting routes to make a complaint if 
necessary.  
In 2020/21, HMRC’s Promote team encouraged 771,000 employers and workers to seek 
further information regarding the minimum wage and also provided a record amount of 
information to ensure that workers and employers were aware of legislation. This was mainly 
through text messaging (SMS), mass email and letter campaigns and resulted in: 
• 
Over 67,000 mass emails opened.  
• 
Nearly 20,000 views of live and recorded webinars.  
• 
Over 408,000 SMS sent,   
• 
Over 198,000 letters sent to employers and workers.   
This demonstrates the significant work the Promote team have done to inform workers of their 
rights and employers of their obligations, ensuring future compliance with legislation. The 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
10 
 
figures presented show that employers and workers are making use of the information and are 
actively seeking to educate themselves on specific aspects.  
Targeted and complaint-led enforcement 
Non-compliance with the minimum wage is identified through two routes. Firstly, a worker can 
raise a complaint via the Acas helpline or via HMRC’s online complaint form. This is referred to 
as “complaint-led” or reactive enforcement. HMRC consider every complaint made by 
a worker (either to HMRC or referred via Acas) and use a risk-based triage to determine the 
most appropriate course of action.   
As with last year, the majority of complaint-led cases in 2020/21 were received via HMRC's 
online complaint form (2,472), as opposed to the Acas helpline (283) or 'other' sources (16). 
For more information, please see Table 9b in the accompanying Excel spreadsheet. 
There are a number of interventions that HMRC can use to pursue a complaint-led case. 
These are proportionate to the level of risk of non-compliance and are designed to ensure that 
workers understand their legal entitlements and receive any arrears owed. The interventions 
that HMRC use include: ‘nudge’ letters, telephone contact with employers and workers and 
face-to-face meetings with employers and workers5.  
Additionally, HMRC can themselves identify cases of non-compliance by proactively targeting 
sectors or employers where they believe non-compliance is prevalent. This is referred to as 
“targeted enforcement”. 
Targeted enforcement is informed by HMRC’s risk model, which uses data from a range of 
sources (including PAYE, information from other labour market enforcement bodies, NMW 
intelligence, complaints data and ministerial priorities) to identify workers most at risk of NMW 
underpayment. The risk model continues to yield encouraging results and accurately identify 
businesses with a high risk of underpayment. For information about the volume of targeted 
enforcement cases through these different sources, please see Table 8b in the accompanying 
Excel spreadsheet. 
As with complaint-led enforcement, there are a number of ways in which HMRC can pursue a 
targeted enforcement case. These include one-to-one meetings with employers, team-based 
reviews of larger businesses and multi-agency joint working (to tackle risks of cross-cutting 
illegal behaviours). 
The threat of being the subject to targeted enforcement provides a valuable deterrent to 
employers and supports workers who may not be aware that they are underpaid or who are 
unwilling to raise a complaint. Targeted enforcement is therefore an essential means to reach 
at risk workers, who may not otherwise come forward to make a complaint. 
 
5 For more information about this activity, please see the 2018/19 report on minimum wage enforcement and 
compliance (Department for Business, Energy and Industrial Strategy, 2020a). 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
11 
 
In 2020/21, targeted enforcement continued to form an important part of enforcement activity; 
HMRC closed nearly 1,800 targeted enforcement cases, with just under one third of these 
cases closing with arrears. These cases returned £14.5m in arrears to 139,000 workers.  For 
more information, please see Table 8a in the accompanying Excel spreadsheet. Figures 2 and 
3 below show that 87% of arrears (£14.5 million) and 90% of workers (138,989) identified were 
found through targeted enforcement; and that this proportion has increased greatly compared 
to pre-pandemic levels.  
 
 
 
 
 
 
 
 
 
 
Source: BEIS / HMRC enforcement data  
Figure 3. Workers identified as underpaid through targeted and complaint-driven 
enforcement 
Source: BEIS / HMRC enforcement data  
Figure 2. Arrears identified through targeted and complaint-driven enforcement 
£0.6
£7.0
£5.2
£3.8
£9.9
£15.8
£14.5
£2.7
£3.3
£5.7
£11.8
£14.5
£5.0
£2.2
£0
£5
£10
£15
£20
£25
£30
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
Millions
Arrears (targeted enforcement)
Arrears (complaint-led)
5,247 43,486
68,290
64,453
96,577
212,499
138,989 
21,071
14,594
29,860
137,332
125,004
50,851
16,207
0
50,000
100,000
150,000
200,000
250,000
300,000
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
Workers identified
Workers (targeted enforcement)
Workers (complaint-led)

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
12 
 
Tables 8a and 9a in the accompanying Excel data show that the proportion of cases closed 
with arrears for targeted enforcement cases is lower than in complaint led cases (32%, as 
opposed to 50%). This gap has increased slightly since 2019/20 as difficulties in contacting 
workers due to Covid-19 were exacerbated in targeted enforcement cases (i.e. compared to 
complaint-led cases where at a minimum HMRC can contact the worker who made the 
compliant).  
Ensuring arrears are returned to workers is a key priority for HMRC, even more so during 
difficult times for workers and employers. Therefore, investigating employers where there was 
a direct source of intelligence (a worker’s complaint), as opposed to predicting non-compliance 
to target certain employers was the most appropriate course of action during this turbulent 
period. It is also important to highlight that a low strike rate is not necessarily a negative result; 
it also shows that those being targeted are compliant or are willing to cooperate with HMRC to 
protect workers’ rights. HMRC are currently working on increasing their compliance work with 
employers through the New Compliance Approach which is yielding positive results thus far 
and will be discussed in more detail in next year’s report. Despite this, the proportion of cases 
where employers are found to be non-compliant through targeted enforcement remains 
relatively high, and this reflects HMRC’s ability to successfully identify employers, especially 
given the increasing volume of targeted enforcement cases. 
Penalties, undertakings, prosecutions, and the minimum wage 
Naming Scheme 
HMRC continues to respond strongly in cases where workers have been underpaid the 
minimum wage, using a mixture of civil penalties, Labour Market Enforcement Undertakings 
and criminal prosecutions. In addition, the BEIS National Minimum Wage Naming Scheme also 
acts as a deterrent to employers from underpaying their workers.  
Civil penalties  
One of the Government’s aims is to ensure that, as a result of enforcement action, workers 
receive the money they are owed as quickly as possible. In the vast majority of cases HMRC 
pursues the civil enforcement route, which is the quickest way of ensuring workers receive 
their arrears. The civil route involves HMRC conducting an investigation, identifying if workers 
have been underpaid, calculating the value of any arrears, and instructing employers to repay 
the arrears as quickly as possible. A penalty of 200% of the total underpayment for all workers 
specified on the NoU is also imposed with the incentive of a reduction to 100% if all the unpaid 
wages and the penalty are paid within 14 days. HMRC can also take enforcement action via 
the civil courts if employers fail to pay the arrears to workers.  
575 penalties were issued to non-compliant employers in 2020/21, totalling £14.1m. Whilst 
these figures have fallen compared to 2019/20 (992 penalties totalling to £18.5m), they remain 
high compared to historic levels despite the difficulties HMRC faced when enforcing throughout 
this financial year.  

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
13 
 
Criminal prosecutions 
For the most serious non-compliance offences, HMRC can refer cases for criminal 
investigation and prosecution. Criminal prosecutions are significantly more costly than civil 
cases, involve much longer timescales and therefore delays in securing arrears, and do not 
guarantee that the full value of arrears is repaid to workers. Therefore, further enforcement 
may be required to secure all arrears.   
HMRC’s Serious Non-Compliance teams undertake a programme of employer-specific 
investigations and multi-agency operations to identify deliberate and persistent offenders and 
take action to bring these employers into compliance. As a result of this, HMRC may also 
identify criminal offences to refer for criminal investigation by HMRC’s Fraud Investigation 
Service (FIS). FIS will consider all the evidence and whether it is in the public interest to 
prosecute. HMRC will then refer cases to the Crown Prosecution Service, which will ultimately 
decide whether to bring a case for criminal prosecution. 
Since 2007, 16 employers have been successfully prosecuted for underpaying the minimum 
wage with an additional case accepting a caution; this is an increase on last year’s figure (15) 
with the most recent prosecution taking place in April 2021. For more information about these 
prosecutions, please see Table 13 in the accompanying Excel data.  
Labour Market Enforcement Undertakings and Orders 
The regime of Labour Market Enforcement (LME) Undertakings and Orders is specifically 
targeted at those employers where serious or persistent breaches of NMW law have been 
identified and action is needed to prevent further offences.  Where HMRC identify an employer 
to be in this category, they may ask them to agree to enter an Undertaking with a number of 
measures which will ensure future compliance. If the employer refuses to enter an 
Undertaking, or fails to comply with an Undertaking, a magistrates’ court (or similar in devolved 
administrations) will have the power to impose an LME Order requiring the employer to take 
action to avoid further offences. Failure to comply with an Order can result in a two-year 
custodial penalty and/or unlimited fine. The number of LMEUs issued by HMRC has increased 
from last year, rising to 24 at the end of 2020/21.  
Naming Scheme 
The National Minimum Wage Naming Scheme remains a key deterrent to employers from 
breaking minimum wage law. The Naming Scheme highlights non-compliant employers by 
exposing their breaches publicly, promoting their future compliance and deterring other 
businesses from underpaying the minimum wage. 
Following the review of the Naming Scheme in 20206 and the increase in the Naming arrears 
threshold to £500 or above, Naming Round 16 was published on 31 December 20207. Round 
 
6 Department for Business, Energy and Industrial Strategy (2020b) 
7 Department for Business, Energy and Industrial Strategy (2020c) 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
14 
 
17 and 18 of Naming have also taken place however Round 16 was the only round to take 
place during the 2020/21 financial year.  
In Round 16, 139 employers were named for £6.7 million in minimum wage arrears owed to 
95,000 workers – the largest amount of arrears ever identified in a Naming round. This means 
that up to and including Round 16 of Naming, over 2,000 employers had been named for 
£17.5m in arrears for 185,000 workers. 
Alongside the list of named employers, from Round 16 the Government published a new 
educational bulletin which highlighted and explained the risk of minimum wage underpayment 
in connection with deductions and payments. The bulletin’s purpose is to increase awareness 
of the most common reasons for underpayment, providing employers with an opportunity to 
review their practices in these areas. Future Naming rounds will also be published with an 
educational bulletin on a particular issue that commonly risks leading to underpayment. 
For more information, please see: https://www.gov.uk/government/news/rogue-employers-
named-and-shamed-for-failing-to-pay-minimum-wage  
 
 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
15 
 
Focus Item: Work of HMRC’s Specialist 
Enforcement Teams (SET) 
In the ‘focus item’ section, we review a specific part of enforcement and compliance activity in 
more depth.  
The HMRC Specialist Enforcement Teams (SET) were created in April 2017 with five teams of 
15 staff each across England, Scotland and Wales.  Their role is to deal with large businesses 
and particularly complex minimum wage enforcement issues. Their creation followed HMRC 
investigations that had raised public concerns about large businesses that often operate on 
multiple sites. Previously, large businesses had generally been considered to be in a position 
to comply with NMW legislation, given their access to legal and HR support. 
Most SET work comprises “targeted enforcement” cases identified by HMRC’s well-developed 
risk model. SET may also handle complaints from workers and third-party information relating 
to large companies. Businesses indicated that they preferred a “once-and-done” approach to 
tackle all potential minimum wage risks in a company or group. SET therefore investigate a 
whole company structure or group, rather than a single entity or location.  
SET work very closely with HMRC’s large business customer compliance managers who share 
information, including details of group/company structures and contact details, to ensure SET 
communicate with businesses at the appropriate level. Those managers now also include 
discussions around the importance of compliance with NMW legislation as part of their annual 
risk review discussions with businesses. In addition, SET use the expertise of HMRC data 
analysts to transfer sensitive personal and payroll/time recording data between the business 
and HMRC. 
SET face a number of challenges when investigating large businesses and complex minimum 
wage issues. These include complexities arising from the size of a workforce spread over 
multiple locations with different worker types and roles, and the diverse nature of some of the 
businesses investigated. In addition, large businesses often have the resources to obtain 
external financial and legal advice, as well as the appetite to challenge minimum wage 
legislation. 
There are also challenges in how investigations are conducted. There is significant work in 
issuing a very large “notice of underpayment”, which sets out the value of arrears owed to 
workers and the amount of the penalty, where detailed schedules and calculations need to be 
set out for each underpaid worker. Legislation provides that a notice of underpayment, may be 
re-issued only once if any detail in an original notice is found to be incorrect. Any inaccuracy 
can potentially be appealed at an employment tribunal. 
Where SET investigate employment agencies with numerous end-users in multiple locations, 
there are practical difficulties in organising visits and arranging to interview workers face-to-

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
16 
 
face. Some agencies work with intermediaries, setting up complex structures, such as umbrella 
or payroll companies, both onshore and offshore, with “administration” deductions from 
workers’ pay. This can make it difficult at times to establish who is the actual employer. 
Movement of workers between agencies is not uncommon with legal disputes between the 
parties regarding the application of TUPE regulations when workers move between agencies. 
This is key to determining who is liable to pay the arrears and penalty, as HMRC can take 
enforcement action against the employer only.   
SET are also involved in emerging labour market issues and have reviewed worker status 
issues within the gig economy to understand the actual working arrangements and 
relationships in place across different sectors. 
The creation of SET had an immediate impact with the leading accountancy firms, who provide 
advice on complying with NMW legislation, recruiting additional staff. This is a positive 
outcome as these advisers often carry out due diligence checks of minimum wage compliance 
as a routine matter, with compliance checks sometimes having started or completed before 
HMRC investigations are opened. 
Due to the success of SET activity and the limited number of large businesses, HMRC reduced 
the number of teams from 5 to 4 during 2020/21 in line with the recommendations of the 
Director of Labour Market Enforcement and BEIS. SET resource is constantly monitored to 
ensure there continues to be a deterrent effect, whilst acknowledging that significant minimum 
wage rises may bring previously compliant large businesses within potential scope of SET 
enforcement activity. 
Table 2: Outcome of SET enforcement activity 
Year 
Case closures 
Arrears(£) 
Workers 
2017 - 2018 
152 
11.0 m 
173,000 
2018 - 2019 
243 
10.6 m 
152,000 
2019 - 2020 
319 
15.7 m 
237,000 
2020 - 2021 
238 
12.2 m 
132,000 
Total 
952 
49.5 m 
693,000 
Source: BEIS/HMRC enforcement data 
Notes: Totals may not sum exactly due to rounding.  
 
 
 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
17 
 
Measuring non-compliance with the 
minimum wage 
The Government uses a number of information sources to assess the scale and nature of 
minimum wage non-compliance, which in turn informs our enforcement approach.  
Estimates of non-compliance can be made using the Office for National Statistics’ (ONS) 
Annual Survey of Hours and Earnings (ASHE); a survey of employees completed by 
employers. ASHE provides information about the levels, distribution and make-up of earnings 
and hours paid for employees8. Using ASHE, we can estimate the number of jobs paid below 
the minimum wage at a particular point in time. These estimates can be broken down by sex, 
age, region, sector, and full-time and part-time working. 
However, a number of methodological issues (including the proximity of the survey to the 
annual minimum wage uprating; the fact that the survey only measures underpayment in the 
formal economy; and there being legitimate reasons for underpayment) mean that ASHE does 
not offer a direct measure of minimum wage non-compliance. Government takes these 
limitations into consideration when using ASHE to inform enforcement. 
In addition, the last two waves of the survey in April 2020 and 2021 have faced particular 
challenges due to the Covid-19 pandemic, namely: 
1. Some businesses were not open during fieldwork, meaning that employers could 
not complete the paper questionnaires sent to their premises. This meant a smaller 
number of employers completed the survey than in previous years. 
2. The type of employers who completed the survey also changed, as certain types 
of employer (e.g. those in the retail and hospitality sector) were more likely to be 
affected by lockdown restrictions. This meant that additional weighting was required to 
adjust the profile of the survey. 
3. Workers were furloughed, meaning that many workers earnt less than they normally 
would during the survey period (i.e. 80% of their normal earnings). The rules for 
calculating furlough pay for the Coronavirus Job Retention Scheme (CJRS) also meant 
that the 2020 and 2021 minimum wage uprating may not have applied to the 
calculation of furlough payments. This is because furlough payments received via the 
CJRS corresponded to hours not worked and the minimum wage only applies to hours 
worked9. Likewise, in 2021 the introduction of flexi-furlough – whereby a worker would 
 
8 Office for National Statistics (2021)  
9 This is because furloughed workers’ minimum wage entitlement depends on when they ‘started’ furlough. For 
example, if a worker started furlough prior to 1st April 2020, they were entitled to the 2019 rates throughout the 
period they were on furlough. If a worker started furlough from the 1st April 2020 onwards, the 2020 rates applied. 
Likewise, if they started furlough from the 1st April 2021, the 2021 rates applied. It is not possible to determine 
which year’s minimum wage rates apply to each worker, because the date they started furlough is not available in 
the ASHE data. 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
18 
 
work some of their contracted hours and received furlough pay for the remainder - 
created further issues for understanding workers’ hourly pay for minimum wage 
compliance purposes.  
Aided by conversations with BEIS and the LPC, the ONS took steps to mitigate the impact of 
the Covid-19 pandemic. This included:  
• adding new variables to capture if employers were topping up furlough pay above 
80% and whether workers were flexi-furloughed; 
• including additional guidance separate to the questionnaire, to help employers 
complete the survey for furloughed workers;  
• extending fieldwork to allow for a greater number of employers to respond to the 
survey; 
• creating new survey weighting so that the employers who responded better 
reflected the UK employer population as a whole; 
• working with HMRC to append markers for furloughed workers; 
• and conducting extra data validation to correct pay information.  
 
Despite this, there are signs that the data and particularly estimates of underpayment have 
changed relative to the years prior to 2020. It is difficult to establish with certainty that any 
minimum wage underpayment is ‘genuine’ underpayment. It could equally be a result of the 
conditions attached to furlough, or because of employers providing erroneous information due 
to uncertainty over how to account for furlough in their response. 
Measuring minimum wage non-compliance in 2021 
The issues outlined above mean that unlike in years prior to 2020, there are various ways in 
which underpayment estimates may be calculated, based on including or excluding furloughed 
workers; and including or excluding those who saw a “loss in their pay” due to furlough.  
Furloughed workers are predominantly receiving pay for hours not worked, which is not subject 
to NMW legislation. This means that most instances where furloughed workers receive an 
amount below the minimum wage, it is unlikely to be ‘true’ minimum wage non-compliance. It is 
instead likely to be associated with the conditions attached to furlough. However, we 
acknowledge that furloughed workers are more likely to be lower-paid, and that some 
furloughed workers in ASHE may already have been receiving less than the minimum wage in 
their job prior to being furloughed (i.e. would have been part of the 408,000 underpaid workers 
identified in 2019, see Figure 4 below). 
Analysis of workers with pay below the NLW/NMW 
Estimates from the ONS found that around 1 million workers earned below the minimum wage 
in April 2021. However, as they acknowledged, a proportion of these workers were furloughed, 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
19 
 
and this is therefore not representative of minimum wage non-compliance. These workers 
would not have worked any hours in the reference period, therefore minimum wage legislation 
would not be applicable to these pay estimates.  
As noted by the Low Pay Commission in their 2021 report10, estimates including furloughed 
workers are an overestimate of underpayment, as many of the furloughed workers would not 
ordinarily be paid below the minimum wage. Similarly, if we exclude furloughed workers, then 
our estimates of underpayment are likely to be underestimates. The reason for this is that 
workers who were still furloughed in April 2021 are likely to be those in low paying sectors 
which were most impacted by the pandemic and restrictions surrounding this. These sectors 
tend to be where the majority of underpayment occurs, hence why excluding this cohort will 
lead to an underestimate of underpayment. 
In the absence of being able to accurately estimate minimum wage non-compliance, we 
undertake our analysis on pay estimates of workers not furloughed, reflecting that minimum 
wage legislation only applies to worked hours.   
Once furloughed workers are removed, we estimate that approximately 228,000 workers were 
paid below the relevant minimum wage in April 2021, as shown in Table 3 and Figure 4 below. 
We recognise that this may be an underestimate, as it excludes some low-paid workers who 
would otherwise be underpaid (i.e. as discussed above, some furloughed workers were likely 
paid below the minimum wage before being furloughed). Given this, it is likely that the true 
figure for underpayment is somewhat higher than this estimate. However, this is unobservable 
in the data. Tables 16-18 and Figures 17-18 in the accompanying excel data provide further 
information on underpayment across different subgroups of worker. 
 
10 Low Pay Commission (2021) 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
20 
 
 
Source: BEIS analysis of ASHE 2016-2021 (ONS) 
Notes: 
Figures are rounded to the nearest thousand.  
This shows underpayment across all minimum wage rates 
 
 
Table 3. Estimates of minimum wage non-compliance in April 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source: BEIS analysis of ASHE 2021 (ONS) 
Notes:  
Figures are rounded to the nearest thousand. 
361,000
341,000
441,000
408,000
347,000
228,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2016
2017
2018
2019
2020
2021
Number of jobs underpaid relevant to Minimum Wage
Year
Minimum wage rate 
April 2021 
23 years old and over (NLW) 
193,000  
21 to 22 years old (NMW) 
15,000 
18 to 20 years old (Development) 
15,000  
16 to 17 years old (Youth) 
2,000  
Apprentice 
3,000  
Total 
228,000  
Figure 4. Minimum wage underpayment over time (2016-2021) 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
21 
 
Underpayment figures for each of the minimum wage rates do not sum to the totals presented because of 
rounding. 
There have been changes to the minimum wage rate bands which will also contribute to the variation in figures. 
Due to the issues with the 2021 data, we cannot be certain how the outlook for underpayment 
has changed compared to last year. Once furloughed workers are removed, the distribution of 
National Living Wage underpayment follows a similar trend to previous years.  
Figure 5 examines this in more detail, by looking at how many people were earning different 
percentages of the minimum wage. In 2020, there was a clear spike in underpayment at the 
previous year’s NLW rate, however the 2021 data differs. There is a small spike in 
underpayment at the 2020 21-24 rate (£8.20). This demonstrates that some underpayment 
may have arisen from an employer’s failure to uplift their employees pay in line with the change 
in age band to bring 23-year-olds into scope of the NLW. For example, the 2021 line shows a 
peak at around 92% of the 2021 rate, roughly equivalent to the 2020 21-24 rate (£8.20). In 
addition to this, given the complexities with the ASHE data, it is likely that our method of 
removing furloughed workers is imperfect and will still contain information relating to furlough. 
Therefore, we cannot be certain that all furloughed workers will have been removed from the 
data and that our results may be skewed due to this. The analysis in this chart complements 
Table 19 and Figure 19 in the accompanying Excel spreadsheet. 
Figure 5. Distribution of National Living Wage underpayment in April 2020 and April 
2021 
Source: BEIS analysis of ASHE 2021 (ONS)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Number of jobs paid below NLW
% of NLW paid
2021
2020

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
22 
 
Responding to the Low Pay Commission’s 
enforcement recommendations 
In their “Non-compliance and Enforcement of the National Minimum Wage” report of April 
2021, the Low Pay Commission did not, for the most part, make new recommendations to 
Government. Instead, they reviewed progress in some of the key areas they had focused on in 
recent years and expanded on some of the original recommendations.  
Previous LPC recommendations on worker support highlighted in the report are:  
• Continue to invest strongly in communications to workers. (2017)  
• Consider how to build confidence in the complaints process, and to work with trade 
unions to understand the current barriers to reporting. (2019)  
• Review the regulations on records to be kept by an employer, to set out the minimum 
requirements needed to keep sufficient records. (2020)  
On worker support, the Government confirms the actions and measures below:  
BEIS continues to invest further in communications to workers on minimum wage increases. 
Although the Covid-19 pandemic necessitated reprioritisation and the normal communications 
campaign did not run in 2020, a campaign ran alongside the April 2021 increases to the 
National Living Wage and National Minimum Wage. This focused on informing employers and 
workers of the new minimum wage rates and encouraging workers to check their pay. It also 
aimed to build confidence in the complaints process by highlighting different avenues for any 
workers who were concerned about underpayment to submit complaints. 
HMRC has continued to build a better understanding of what motivates and discourages 
workers from reporting underpayment. Research into complaint behaviour in other settings 
suggests that fear of reprisal and anonymity are recognised respective barriers and 
enablers. With over half of the complaints received by HMRC relating to a worker’s previous 
employer, as opposed to current, this suggests fear of reprisal is a barrier to reporting 
minimum wage underpayment.  
In a small survey of workers who have made a complaint to HMRC, nearly half of respondents 
expressed concern for other workers at the same employer and want to make sure that 
colleagues receive what they are rightfully entitled to too. 
Reflecting these insights, HMRC messaging to workers has been adapted to include reference 
to the option to remain anonymous, the ability to report a previous employer and the potential 
benefits to other workers. Perhaps as a consequence, more workers are now asking to remain 
anonymous to their employer when they make a complaint. 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
23 
 
HMRC has been conducting a series of randomised control trials, using bulk letter releases to 
workers, to better understand the different motivators to reporting and how those are 
communicated. 
HMRC has also engaged with Citizens Advice and trade unions, providing training and 
awareness sessions to help front line worker advocates to recognise potential underpayment, 
signpost accordingly and ultimately build confidence in the complaints process. 
In 2021, following a review, BEIS also amended the National Minimum Wage regulations on 
record keeping, extending the period of time for which employers are required to retain pay 
records for minimum wage enforcement purposes from 3 years to 6 years. This brought 
record-keeping requirements in line with the 6-year limitation for which HMRC can require 
payment of minimum wage arrears. Following this, the minimum wage guidance on record 
keeping was amended after constructive feedback from worker representatives, and reference 
to the record-keeping is included in all educational bulletins published in connection with the 
National Minimum Wage Naming scheme since its relaunch.  
Previous LPC recommendations on employer engagement highlighted in the report are:  
• Invest time in getting the guidance to employers right, as this will simplify the task of 
enforcement in the longer term. (2019)  
• Monitor the effects of the increase in the threshold for Naming employers found to have 
underpaid workers. (2020)  
• Develop a similar approach to the Section 89 notices used by the Pensions Regulator 
for minimum wage compliance. (2017)  
On employer engagement, the Government confirms the actions and measures below:  
The Government reviewed its comprehensive “Calculating the Minimum Wage” guidance, 
drawing on the views of an external stakeholder panel comprising representatives of 
employers, workers and payroll providers. Following publication of the revised guidance in 
March 2021, BEIS has worked to improve navigation of the guidance. In addition, HMRC have 
been seeking stakeholder feedback and sharing this with BEIS with a view to making further 
improvements.   
In line with the LPC’s recommendation on Section 89 notices, and as part of the Naming 
review, the Government also committed to be more transparent about the most commonly 
found types of breaches. Typically, these are deductions from worker’s pay and unpaid 
working time. BEIS therefore publishes an educational bulletin with each Naming round to help 
raise awareness of minimum wage rules and improve compliance. Bulletins include analysis of 
the most common breaches in each Naming round, examples to ensure understanding of how 
such breaches can be avoided, and links to the Government’s Calculating Minimum Wage 
guidance for further details.  

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
24 
 
Previous bulletins have also referenced the amended record-keeping requirements in line with 
the LPC’s recommendation on worker support. The Government has committed to monitoring 
the effects of the increased Naming threshold and will do so once several Naming rounds have 
been published. 
Previous LPC recommendations on prioritisation highlighted in the report are:  
• Evaluate what data is recorded in non-compliance investigations and consider how this 
can be used to develop measures of cost-effectiveness. (2020)  
On prioritisation, the Government confirms the actions and measures below:  
HMRC enforces Minimum Wage regulations on behalf of BEIS using case management and 
reporting systems to support the operational management of cases. Those systems do not 
provide granular levels of data around status of workers, ethnicity or type of payroll.  
Most of HMRC’s proactive enforcement cases stem from their risk model, which is updated 
annually and identifies employers with the largest risk of minimum wage underpayment. The 
model considers a range of information including Real Time Information, HMRC employer 
compliance information, underpayment data from the Office of National Statistics’ Annual 
Survey of Hours and Earnings (ASHE), apprenticeship data, location data, as well as worker 
characteristics including gender and age. HMRC’s Risk Intelligence Service further analyses 
the data to determine the links to Minimum Wage underpayments. This allows HMRC to 
produce proactive enforcement cases for sectors and populations at highest risk of 
underpayment.  
HMRC have also undertaken several targeted projects in the last few years, focused 
specifically on apprentices and the sectors in which they are most prevalent, such as 
hairdressing and childcare sectors. 
The development of new IT systems will allow scope for more detailed granular information to 
be tracked on types of workers and protected characteristics, subject to GDPR requirements 
and workers’ willingness to provide this information as part of the investigation process. 
 
 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
25 
 
References 
Department for Business, Energy and Industrial Strategy (2020a). National Living Wage and 
National Minimum Wage: Government evidence on compliance and enforcement 2018/19 
[online]. Available at: https://www.gov.uk/government/publications/national-living-wage-and-
national-minimum-wage-government-evidence-on-compliance-and-enforcement-2019  
Department for Business, Energy and Industrial Strategy (2020b). Naming employers who fail 
to pay minimum wage to be resumed under revamped rules [online]. Available at: 
https://www.gov.uk/government/news/naming-employers-who-fail-to-pay-minimum-wage-to-be-
resumed-under-revamped-
rules#:~:text=The%20naming%20scheme%20will%20resume,the%20measure%20as%20a%2
0deterrent  
Department for Business, Energy and Industrial Strategy (2020c). Rogue Employers Named 
And Shamed For Failing To Pay Minimum Wage [online] Available at: 
https://www.gov.uk/government/news/rogue-employers-named-and-shamed-for-failing-to-pay-
minimum-wage  
Department for Business, Energy and Industrial Strategy (2021a). National Living Wage and 
National Minimum Wage: Government evidence on compliance and enforcement 2019/20 
[online]. Available at: https://www.gov.uk/government/publications/national-living-wage-and-
national-minimum-wage-government-evidence-on-compliance-and-enforcement-201920  
HM Government (2021a). The National Minimum Wage and Living Wage: Who gets the 
Minimum Wage [online]. Available at: https://www.gov.uk/national-minimum-wage/who-gets-
the-minimum-wage  
HM Government (2021b). National Minimum Wage and National Living Wage Rates [online]. 
Available at: https://www.gov.uk/national-minimum-wage-rates 
Low Pay Commission (2021). Non-compliance and enforcement of the National Minimum 
Wage 2021 [online]. Available at: https://www.gov.uk/government/publications/minimum-wage-
underpayment-in-2021  
Office for National Statistics (2021). Employee earnings in the UK: 2021 [online]. Available at: 
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/
bulletins/annualsurveyofhoursandearnings/2021  
 

National Minimum Wage: 2020/21 Enforcement and Compliance Statistics 
26 
 
This publication is available from: www.gov.uk/government/publications/national-living-wage-
and-national-minimum-wage-government-evidence-on-enforcement-and-compliance-2021  
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