Latest LPC report explains how COVID-19 has impacted compliance with NMW regulations

12 May 2021

The latest report from the Low Pay Commission (LPC) centres on the topic of non-compliance and enforcement of the National Minimum Wage (NMW) in 2021, following on from the period in which businesses and individuals have had to deal with the economic turbulence posed by coronavirus.

The main findings of the report show that low-paid workers have been left more vulnerable than ever as a result of the pandemic, and that businesses have been under immense amounts of pressure during this time. Subsequently, the likelihood of the underpayment of minimum wage rates has increased significantly, and there needs to be an appropriate response from the Government to address this.

Previously submitted recommendations from the LPC are reviewed within the report, which include a focus on worker support, employer engagement, and prioritisation, in terms of enforcement activity being directed to the most serious cases of non-compliance. The LPC states that there is still work to be done in relation to strengthening worker confidence in the enforcement system, in assisting employers to ensure that they comply with NMW rules and in ensuring that HMRC’s resources are used in the most effective way.

The creation of the Coronavirus Job Retention Scheme (CJRS) has caused problems in relation to producing accurate estimates of the issue of underpayment in 2020 for comparison against earlier years. If, for example, a worker has been furloughed and paid at 80% of their usual wages, then, on the surface, it may appear that they have been underpaid, but NMW rules do not apply to any time that an individual spends on furlough.

The report also explores the prevalent issue of labour market abuse specifically within the textiles industry in Leicester. The LPC has collected wide-ranging data that clearly highlights the problem, which has been ongoing for years, but also recognises that there is no easy solution for enforcement bodies in this area.

CIPP comment

The LPC is currently consulting on what the NMW rates should be from 1 April 2022. The CIPP’s Policy team are submitting a written response to this consultation and are currently running a survey so that we can include the views of you – the payroll professionals. The survey should take roughly 15 minutes to complete, and we thank you in advance for your input.


The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.