Deductions, hours and complaints
Employer penalties for minimum wage underpayment
Enter the arrears owed to each worker and the number of workers underpaid: the tool gives the penalty on a notice of underpayment and the reduced amount for early payment.
Penalty on a notice of underpayment
Penalty, up to
£7,200
| Per worker (200%, capped) | £2,400 |
| If paid within 14 days | £3,600 |
| Arrears to the workers too | £3,600 |
When an HMRC compliance officer finds that a worker was paid below the minimum wage, the officer can serve a notice of underpayment. It requires the employer to pay the arrears to every worker named, recalculated at today's rate, and a financial penalty of up to 200% of those arrears, with a ceiling of £20,000 per worker. If the employer complies in full within 14 days of the notice being served, the penalty is cut by 50%. An appeal goes to an employment tribunal within 28 days. Three workers each owed £1,200 would mean £3,600 in arrears and a penalty of up to £7,200, or £3,600 if paid on time. Beyond the notice, refusing or wilfully neglecting to pay the minimum wage is one of six criminal offences, punishable by an unlimited fine, and serious or repeat offenders can be bound by labour market enforcement undertakings or orders. Employers found to underpay might also be named by the government, while those who correct errors through a voluntary declaration are, except in exceptional cases, neither named nor penalised.
Back pay owed for an underpayment
Owed if repaid now
£624.57
| Rate at the time | £12.21 |
| Rate today for that band | £12.71 |
| Owed if repaid from 1 April 2027 | £649.14 |
Underpayment ÷ rate at the time × current rate of the band you were in. Enter the age you were then.
Rates and rules read by Radif Partners · Editorial policy · Method
How HMRC finds underpayment
HMRC enforces the minimum wage and can open an investigation after a worker complains, directly or through Acas, or on its own initiative using risk models and information from third parties. Its officers do not have to give reasons for an inspection. Under the HMRC enforcement guidance they can require records and explanations, enter business premises at any reasonable time to interview and inspect, summon an employer to an interview with reasonable written notice, and take records away for copying. Obstructing an officer, or refusing to provide information, is itself an offence.
The notice of underpayment
A notice of underpayment does two things: it orders arrears to be paid to each worker named, worked out with the arrears formula, and it sets a penalty payable by the employer.
| Arrears per worker | Workers | Penalty | If paid within 14 days |
|---|---|---|---|
| £85.81 | 1 | £171.62 | £85.81 |
| £1,200 | 3 | £7,200 | £3,600 |
| £8,000 | 2 | £32,000 | £16,000 |
| £15,000 | 1 | £20,000 | £10,000 |
The cap bites only on large arrears: at £15,000 owed to one worker the penalty would be £30,000 without it, but stops at £20,000. The arrears themselves are never capped and are always owed in full to the workers.
Within 28 days the employer may appeal to an employment tribunal. If it neither appeals nor pays, HMRC can bring proceedings on the worker's behalf in a tribunal or a civil court, or move to prosecution.
The six criminal offences
- Refusing or wilfully neglecting to pay the minimum wage.
- Failing to keep or preserve minimum wage records.
- Causing or allowing a materially false entry in those records.
- Producing records or information known to be materially false.
- Intentionally delaying or obstructing a compliance officer.
- Refusing or neglecting to answer questions, give information or produce documents.
Three of the six concern records, which shows how central they are. Employers must keep enough records to prove the minimum wage was paid in every pay reference period and produce them in a single document for a given worker and period; records created from April 2021 must be kept for 6 years. Deliberate non-payment can bring an unlimited fine.
Undertakings, orders and naming
For more serious or persistent offenders, HMRC can seek a labour market enforcement undertaking: a written commitment setting out what the business must do and by when, for example keeping accurate records, lasting no more than 2 years. An employer that refuses one, or breaks it, can be taken to court for an order, and breaching an order can lead to up to 2 years in custody, an unlimited fine, or both. Separately, the government may publish the names of employers that underpaid.
Correcting mistakes before HMRC does
An employer that spots its own error, such as a missed pay period after the April rise or an unrefunded uniform charge, can repay the arrears and make a voluntary declaration. HMRC then checks the calculation and, except in exceptional cases, neither names the business nor charges a penalty. With the rate due to rise to £13.21 at 21 and over from 1 April 2027, as announced on 28 October 2026 and still to be set in regulations, payroll settings are worth checking against the first pay period that starts on or after that date.
The GOV.UK guidance for employers summarises these duties. Workers who want to trigger an investigation will find the steps on the reporting page.