NMW underpayment: What does this mean for payroll bureaus?

1. What is the HMRC NMW naming list?
2. The sectors featuring most prominently 
3. What are the National Minimum Wage penalties?
4. Why does NMW underpayment happen?
5. How can bureaus manage NMW compliance across their client base?'
6. Protecting your bureau from NMW risk

The HMRC NMW Naming Scheme is a public enforcement mechanism through which the government names employers found to have paid workers below the legal minimum. Employers are named after HMRC investigations conclude, with the results published in rounds.

Round 23, published on 19 March 2026, is notable for two reasons. It is the first naming round since the Chancellor's Budget commitment to publish more frequently, putting greater pressure on employers, and by extension their bureaus, to keep payroll up to date. It is also the final naming round before the Fair Work Agency, a new enforcement body created by the Employment Rights Act 2025 to bring workers' rights enforcement under one roof for the first time, which became operational on 7 April 2026..

High-profile names on the list include Bupa Care Services, Costa, Hays Travel, Harvey Nichols, KPMG, Norwich City Football Club, and Busy Bees Nurseries. The majority of entries, however, are smaller businesses: care providers, nurseries, hospitality operators, cleaning companies, and independent retailers. These are exactly the types of clients that make up a typical bureau portfolio, which makes Round 23 particularly relevant to the bureau market.

Looking at the 389 employers named in Round 23, several sectors stand out.

Care and social services feature heavily, with domiciliary care providers, residential care homes, and supported living companies appearing multiple times. Childcare is a consistent presence, with nurseries and pre-school playgroups across the UK included in the round. Hospitality and catering also feature prominently, as does cleaning and facilities management.

These are sectors where shift-based work, variable hours, high turnover, and younger workforces on lower rate bands create a higher baseline risk of payroll errors. They are also among the most common client types for UK payroll bureaus. If your client base includes care providers, hospitality businesses, or cleaning contractors, the patterns visible in Round 23 are directly relevant to the work you do every day.

National Minimum Wage underpayment can occur in any industry, and the breadth of this naming round reflects that. Garages, law firms, construction firms, retailers, and hairdressers all feature alongside the care and hospitality names. No sector in your client portfolio should be treated as low risk by default.

The consequences of NMW underpayment extend well beyond repaying what is owed. Round 23 saw £12.6 million in National Minimum Wage penalties issued to 389 employers, on top of the £7.3 million in wages already repaid. That represents penalties significantly exceeding the original arrears in many cases, and illustrates how quickly the financial exposure escalates.

For your clients, public naming carries reputational risk that is difficult to manage and harder to recover from. For your bureau, a client appearing on the HMRC list raises questions about the payroll service that supported them. In a market where bureaus compete on accuracy, reliability, and compliance expertise, that association matters.

The government has been clear that enforcement will intensify. Employment Rights Minister Kate Dearden stated that nobody should finish a week's work to find they have been paid less than they earned, and that enforcement action will continue. With the Fair Work Agency now operational and committed to publishing naming rounds more frequently, the gap between an error occurring and public consequences following is shortening.

The current NMW and National Living Wage rates, which came into effect in April 2026, are:

These represent a significant uplift on the 2025 rates. The National Living Wage rose from £12.21 to £12.71, and the 18 to 20 rate from £10.00 to £10.85. Any client payroll that was not updated when these rates came into effect in April 2026 is already out of step with the law.

The government has acknowledged that most NMW underpayments are not deliberate. They arise from payroll processes that are not set up to catch common edge cases consistently. Understanding the most common causes of National Minimum Wage underpayment is essential for bureaus who need to protect their clients and their own reputation.

Incorrect rate applied across age bands

When a worker turns 18 or 21, their pay rate needs reviewing from that birthday. When you are managing payroll for a large number of clients, a missed age-band change in one client's data is easy to overlook without automated flagging built into your process. Multiply that risk across a full client portfolio and the exposure becomes significant.

Deductions reducing effective pay below minimum

Deductions for uniforms, tools, or employer-provided accommodation can tip an employee's effective hourly rate below the legal minimum if not carefully structured. Clients in care, hospitality, and facilities management are particularly prone to this, often because deductions are standard practice in their sector without anyone checking whether they remain NMW-compliant.

Unpaid working time

Travel time between assignments, time spent waiting for shifts to start, and mandatory training outside contracted hours can all count as working time for NMW purposes. If these hours are not recorded and paid, HMRC treats them as underpayment. For bureau clients in care and field-based sectors, this is one of the most common triggers for investigation.

Salary sacrifice schemes structured incorrectly

Salary sacrifice arrangements can reduce an employee's effective hourly rate below the minimum if not reviewed after each April rate uplift. When processing a high volume of client payrolls simultaneously, this is an easy check to miss without a structured review process in place.

Salaried workers doing extra hours

Workers on a fixed monthly salary must still receive at least the NMW for every hour worked. If a client's staff regularly exceed their contracted hours without a pay adjustment, underpayment can occur even where the headline salary looks sufficient. This is often invisible at payroll level without visibility into actual hours worked.

Missing the April rate update across clients

NMW rates change on 1 April each year. For bureaus relying on manual update processes, applying the correct rates to every client simultaneously creates multiple points of failure. A single client missed in the update cycle can result in months of underpayment before anyone notices.

Managing NMW compliance at scale requires more than individual vigilance. It requires a systematic approach that makes it structurally difficult for errors to persist across your client portfolio.

Apply rate updates automatically across all clients

Build the April uplift into your bureau calendar well in advance. The rate change, and any related recalculations including deductions and salary sacrifice contributions, should be applied across every client simultaneously. Manual processes applied client by client are where things get missed.

Build a deduction audit into your standard client review

Reviewing deductions made from wages should be a regular part of your client management process, not just a one-off onboarding check. This is especially important for clients in sectors where uniform costs, equipment charges, or accommodation deductions are standard practice.

Flag age-band changes before they take effect

A worker turning 18 or 21 needs a rate review from that birthday. Across a large client base, the only reliable way to ensure this happens consistently is through automated flagging in your payroll platform, rather than relying on clients to notify you.

Check salary sacrifice arrangements after every April uplift

Confirm that no client's salary sacrifice deductions have reduced effective hourly pay below the new NMW rates. Logging this as a standard post-uplift task for every client reduces the chance of it being overlooked.

Establish clear working time expectations with clients

Make sure clients understand that travel between sites, pre-shift availability, and mandatory training time may need to be captured and paid. A clear briefing process at onboarding, and a periodic reminder, reduces the chance of a client's unpaid working time creating a compliance problem you are not aware of.

Maintain thorough records for every client for at least six years

The Fair Work Agency has expanded powers to investigate historic pay periods. Clear, accessible records for every client protect both them and your bureau if questions are raised long after the payroll period in question.

The compliance failures in Round 23 are the result of processes that were not built to catch errors consistently at scale. For bureaus, the right platform should reduce your points of failure, support systematic compliance checks, and give you visibility across your entire client base.

If you are reviewing your bureau's processes and want to understand how Paycircle can support your approach, book a demo or get in touch with our team.