UK minimum wage 2026: the 5-point payroll audit after the Fair Work Agency crackdown
The Fair Work Agency named 658 employers for minimum wage underpayment on 2 September. Here are the five checks to run on your own payroll, and how to fund the fix if back pay is owed.
Reading time5 min read
CategoryBusiness guides
Written byThe bizbritain team
On 2 September the Fair Work Agency named 658 employers for paying staff below the minimum wage. B&Q, Tesco, Whitbread and Five Guys were all on the list. Between them the named employers owed £4m to more than 27,000 workers, and picked up £7m in penalties. Very few of these were deliberate. Most were rota maths, uniform deductions and birthdays nobody updated.
Section 01
What just happened
The Fair Work Agency is the labour market enforcement body created by the Employment Rights Act 2025. It brings minimum wage enforcement, employment agency rules and modern slavery work under one roof.
According to the Fair Work Agency, this round named 658 employers. It ordered £4m in arrears repaid to more than 27,000 workers, and issued £7m in penalties.
B&Q was the largest single case. According to the BBC, it underpaid 4,530 workers by nearly £457,000.
Big names lead the list because big employers have the most staff. The rules and the enforcement are the same for a cafe with six people on the rota. The difference is that a small employer has no press office, and less cash to absorb the bill.
658employers named in this round
£4min arrears ordered back to workers
27,000workers repaid, on the agency's own figures
£12.71hourly minimum for workers aged 21 and over
The current rates apply from 1 April 2026. According to gov.uk, they are £12.71 an hour for workers aged 21 and over, £10.85 for 18 to 20 year olds, and £8.00 for under-18s and apprentices.
Section 02
The five payroll mistakes that catch small employers
These are the causes gov.uk lists most often. None of them look like underpayment on a payslip.
Deductions connected with the job
Uniforms, tools, kit and training. According to gov.uk, a deduction or a payment for something connected with the job counts against minimum wage pay. Buying your own branded polo shirt can take an hourly rate under the line.
Working time you are not paying for
Opening up, cashing up, waiting for a delivery, travelling between jobs, and time spent training. If the worker has to be there, it is working time.
A birthday nobody actioned
The rate changes when a worker turns 18 or 21. Payroll will not do it on its own. This is the single easiest error to make and the easiest to fix.
The apprentice rate left running
According to gov.uk, the apprentice rate covers apprentices under 19. It also covers those aged 19 and over in their first year. After that they move to the rate for their age.
The April increase not applied
Rates rise on 1 April every year. Salaried staff are the ones to check, because their pay does not move with their hours.
Section 03
What a finding actually costs
Arrears are only part of the bill. According to gov.uk, the penalty is 200% of the underpayment, capped at £20,000 per worker. It is halved if the arrears and half the penalty are paid within 14 days.
There is one detail that changes the size of an old error. Arrears are recalculated at the current minimum wage, not the rate that applied at the time. A shortfall from three years ago is repaid at today's £12.71.
So this is a cash event, not an accounting one. A rota error repeated across twenty staff over two years adds up quickly, and it lands as one bill.
Section 04
Funding the fix
Two costs usually arrive together. The back pay, and the change that stops it happening again.
Back pay is a working capital problem. The money was earned by your staff, so it is not a growth cost and there is nothing to show for it. It also rarely fits inside one month's takings. A short-term working capital facility can spread it across a year instead.
The systems half is cheaper. Payroll software, a one-off payroll review, or a bookkeeper on a monthly retainer.
If the bill is big enough to need finance, get the structure right before you sign anything. A broker can put the same case to a wider range of lenders than you would reach alone. The right facility for a one-off liability is not the same as the right facility for growth. Check your eligibility, or talk to a broker today.
This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.
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