The regulator set to take over enforcement of the National Minimum Wage will wield “bigger, more powerful enforcement tools” than HMRC’s current team, a former HMRC investigator has warned. 

According to Jeni Morris, co-founder of Fair Work Solutions and a former HMRC national minimum wage investigator, the Fair Work Agency, the new enforcement body that took over responsibility for policing UK employment law from HMRC and other agencies, will have data-sharing powers HMRC’s National Minimum Wage team currently lacks: 

“They’ve got the legislation written down already, where they can share data between different departments and everything else, whereas at the moment, HMRC’s NMW team cannot go anywhere else to get the data,” she told Employment Hero. 

Her comments, delivered on Friday 11 September during Employment Hero’s recent webinar, “Getting Payroll Right: National Minimum Wage Under the Microscope,” come as nearly 660 UK businesses have been named for falling short of national minimum wage requirements – raising questions about how smaller businesses will cope when the Fair Work Agency takes over full enforcement of the National Minimum Wage from HMRC in April 2027.

Moderated by Sarah Sharpe, founder of Payroll Ninjas, the panel also included Phil Harbage, senior implementation consultant at Employment Hero, and Nicola Denison, principal consultant of managed services at Phase 3, independent specialists in HR, payroll and finance technology.

Nicola pointed to a common misconception among employers: that once a worker has agreed to a salary sacrifice deduction, such as into a pension, it no longer needs to be counted when checking whether they’ve been paid the minimum wage. 

“There tends to be a misconception… because the employee’s opted to have that deduction, if I’m on a salary, then it shouldn’t count towards that minimum wage calculation,” she said. “It still does count.

Similar confusion showed up among the businesses named in the Fair Work Agency’s first naming round. Underpayments at two NHS bodies, St George’s, Epsom and St Helier Hospital Group and St George’s University Hospitals NHS Foundation Trust, were linked to salary sacrifice schemes, though the trust covering both groups has now altered its processes after a HMRC review and disputes that any staff were underpaid. 

What the Fair Work Agency’s first naming round found

Across the full list, released jointly by the Fair Work Agency and Department for Business and Trade on 3 September 2026, 658 employers were named in total, with around £4 million repaid to more than 27,000 workers and £7 million in penalties issued. It was the first such round since the Fair Work Agency launched in April 2026.

The businesses involved ranged far beyond healthcare. Retail giant B&Q underpaid 4,530 workers by a combined £456,934.72, which the company attributed to errors calculating geographical allowances, while fast-food franchise Five Guys underpaid 3,699 workers by £54,642.47, blaming “technical differences in how payroll regulations were applied.” 

In the same government statement, Matthew Taylor, chair of the Fair Work Agency’s advisory board, said most employers “want to do the right thing,” but added that those who fall short should expect “robust enforcement” to protect workers and maintain a fair playing field for responsible businesses.

The scale and range of the businesses named shows minimum wage compliance isn’t simply a resourcing problem. It’s a warning UK SMEs, few of which employ a dedicated payroll compliance specialist, can’t afford to write off either. 

Why well-resourced employers still got it wrong

Payroll administration has come a long way since PAYE was introduced on 6 April 1944, replacing a system of annual or twice-yearly tax assessments with deductions calculated at source, but the rules have only grown more complex since.

Some payroll professionals are turning to new tools for support. According to a 2026 BrightPay survey of payroll professionals, 56% of UK and Ireland payroll specialists now use AI at least occasionally in their role, mostly for drafting communications and checking statutory rules rather than the calculations themselves. 

Jeni pointed to a more basic source of error: how an employee is classified in the first place. Under government guidance, the calculation method for minimum wage pay depends on which type of work an employee does. “Every single employee does a certain job within a business, and each one has a different work category,” she said. “There’s only four: time, salaried, output. If you’re none of those, you’ll fall into the unmeasured pot.

Phil Harbage, Employment Hero’s senior implementation consultant, told the panel that working time is broader than most people assume: “Working time isn’t just that shift time, you’ve got travel time in there. For many roles, waiting time is working time.” 

He raised mandatory training as the same kind of blind spot: “That mandatory training, is that paid for? Should it be paid for? Technically [employees] are working, because it is mandatory training they have to do. And it’s those kinds of things that really trip people up when it comes to the national minimum wage.”

Even when employers know the rule, they can still slip up because of variations in training speed, Jeni pointed out. “Not everyone learns and trains at the same speed,” she said. “Someone might go through it in 15 minutes. Someone might struggle and take an hour and a half.”

Where Deductions Are Still Catching Businesses Out

A deduction that stays fixed while pay falls is another blind spot Phil flagged. He described employees on long-term sick leave or maternity pay whose salary drops accordingly, while a benefit-in-kind deduction for something like a company car or gym membership keeps being taken out at the same rate: “their salary is dropped, but their deductions haven’t, and that deduction is then taken below minimum wage.”

Government guidance confirms that benefits in kind never count towards minimum wage pay, and salary sacrifice deductions reduce it in the same way: a deduction the employee agreed to still counts against the minimum wage threshold, regardless of how the paperwork frames it. 

The margin for error is narrow because minimum wage pay is calculated to the exact hour and the penny. Panellists noted that even a routine assumption, such as treating a year as 52 weeks rather than the correct 52.1429, is enough on its own to tip a worker below the threshold. 

From April 2027, when the Fair Work Agency takes over full enforcement of the National Minimum Wage from HMRC, it will do so with around 500 staff transferring from HMRC’s existing enforcement team, plus the aforementioned wider data-sharing powers. 

The key for businesses to remember ahead of that transition is that failure to remain compliant doesn’t have to stem from obvious bad decisions. It can emerge from small errors in judgement that go unnoticed until it’s too late, and those are exactly what an inspection is built to find, whether it happens tomorrow or after the Fair Work Agency takes over in 2027.