Minimum wage crackdown begins today and one small mistake could cost your business thousands

The latest minimum wage rates kick in today (1st April 2026).

389 employers were fined last year for failing to comply with the minimum wage rules.

They were operating across retail, hospitality, care, travel, manufacturing, and high‑street brands. In total they had to pay back £7.3 million to 60,000 workers and were fined a total of £12.6 million on top of the pay back orders.

A mix of large brands and small businesses were named and the names reached the press. They included:

• Costa Coffee

• Hays Travel

• Busy Bees

• Norwich City Football Club

• Bupa

• Poundstretcher
  …alongside many micro and small employers.

The message is clear. HMRC is increasingly proactive, not just responding to complaints.

• Most breaches are accidental, caused by payroll errors, uniform deductions, unpaid training, or mis‑recorded hours.

• The new Fair Work Agency (launching April 2026) will have stronger powers and publish naming rounds more frequently.

Photo by Sue Winston on Unsplash

This means small businesses must tighten compliance now to avoid being caught out in future.

Most breaches are down to errors in a complicated system but the penalties are the same as if you had done it deliberately:

• Up to 200% of arrears owed

• Public naming and shaming

• Back pay for up to 6 years

• Reputational damage

Small businesses are disproportionately caught out because the rules are more complex than they look.

This is not a fully comprehensive list. Talk to your bookkeeper, accountant or payroll provider. The 10 biggest risks that cause small businesses to fall foul of minimum wage rules

Uniform or equipment deductions

If your employees have to buy:

• black trousers

• specific shoes

• branded clothing

• tools or equipment

…those costs reduce their pay for minimum wage purposes. A £30 pair of shoes can push someone below the legal rate.

Unpaid training, induction, or trial shifts

Any time spent:

• training

• shadowing

• onboarding

• mandatory meetings

• trial shifts

must be paid at minimum wage otherwise the time spent at work is paid at a lower hourly rate than the legal limit.

Travel time between appointments

This really affects:

• carers

• cleaners

• trades

• delivery staff

Travel between jobs counts as working time. If you don’t pay for it you’ll be in danger of underpaying.

Salaried employees whose hours creep up

If someone is salaried but regularly works more hours than their contract states, their effective hourly rate may fall below minimum wage.

Incorrectly calculating age changes

Rates change:

• every April

• and could change on the employee’s birthday

Missing those dates is one of the most common compliance failures.

Not paying for clock‑in / clock‑out time

If staff must arrive early to set up, stay late to close, or complete tasks outside their shift, that time counts as work and has to be paid.

Deductions for mistakes, till shortages, breakages

If you deduct money for:

• till errors

• breakages

• customer walkouts

…this can push pay below the legal minimum.

Incorrect apprenticeship classification

You must use the apprentice rate only if:

• the person is on an approved apprenticeship, and

• they meet the age/years‑in‑apprenticeship rules.

Misclassification is a common and attracts the wrath of HMRC

Misunderstanding accommodation offset rules

If you provide accommodation, you can only charge up to the official accommodation offset (the set maximum amount under the rules: £11.10 from April 2026). Charging more reduces pay for minimum wage purposes. If you provide free accommodation you add the official accommodation offset. This can bring the wage up to the minimum wage level.

Rounding down hours or unpaid breaks that aren’t real breaks

If employees are interrupted during breaks, or breaks are too short, they count as working time.

Protect yourself from penalties

1. Run a minimum wage audit every April and every birthday

Check:

• hourly rates

• deductions

• uniform requirements

• travel time

• training time

• salaried staff hours

This is the single best defence.

2. Document everything

HMRC will want evidence. Keep:

• timesheets

• rota records

• payroll reports

• training logs

• uniform policies

• deduction authorisations

If it’s not documented, HMRC will assume it didn’t happen.

3. Avoid deductions wherever possible

If you must deduct, get written consent and check the impact on minimum wage.

4. Pay for all time that is “work‑related”

If in doubt, pay it.
This includes:

• mandatory WhatsApp messages

• team meetings

• handovers

• cleaning up

• travel between jobs

5. Use payroll software that flags minimum wage risks

Up to date systems can automatically warn you if someone is close to the threshold.

6. Train managers and supervisors

Most breaches happen because a supervisor:

• asked someone to stay late

• deducted for a mistake

• required a uniform

• forgot to record hours

Managers need to understand the rules and you need to be sure they are empowered to apply them and abide by them.

7. Review contracts and handbooks

Make sure they reflect:

• paid training

• paid travel time

• uniform policies

• break rules

• expected hours

Clear policies reduce accidental breaches.

8. Check apprentices carefully

Confirm:

• the apprenticeship is approved

• the age and year of apprenticeship

• when they move to the higher rate

9. Keep an eye on “effective hourly rate” for salaried staff

If hours creep up, adjust pay or hours before it becomes a breach.

10. Get advice early if unsure

A quick check with an accountant, HR adviser, or payroll specialist is far cheaper than a penalty. If you’re a member of a trade association or membership organisation they will have the necessary information to hand.