Falling foul of the law as an employer isn’t something you want to find yourself doing. Sadly, that is not the case for all UK businesses, and whether intentional or not, there are hundreds of businesses found to be exploiting workers or sidestepping laws in place to protect employees.
In 2024, 524 businesses were named and shamed for not paying workers the national minimum wage. This process involves public disclosure of the business’s non-compliance, often leading to reputational damage and loss of customer trust. And it was not just small businesses; big household names like The Body Shop found themselves on the list.
But paying the right wage isn’t the only way businesses find themselves in trouble; there are multiple ways you can fall foul of employment laws, such as not deducting the right amount of pay, i.e. deducting for uniforms and expenses, failing to pay for working time, including for travel and training and not paying apprentices at all or the correct rate.
Understanding employment laws is the best way to empower yourself and your business to avoid becoming one of the numerous businesses at the wrong end of the law regarding employees. By talking to lawyers and HR departments to ascertain both company and employee rights and putting rigorous controls and policies in place, you can keep things legal and above board.
But what are the consequences of neglecting employment laws, and what could you be facing for flouting the law and treating your employees poorly, whether you meant it or not?
Photo by RDNE Stock project:
Fines
The fines you can receive for being caught for non-adherence to legal issues pertaining to employees can range from hundreds to hundreds of thousands of pounds, and the exact amount will relate to the crime committed and the severity and scale of the issue you have been found to be guilty of.
Compensation
You will be required to pay employees compensation for what you owe them in addition to any fines you might be required to pay. The level of compensation, determined in the same way as the fine, ensures a fair outcome, accounting for the amount withheld from the employee and any extra amounts for the hardship, distress, etc.
Legal Cases
In the event of severe issues such as your workplace causing illness, injury, or severe distress and discrimination, for example, your employee will have every right to take you to court. Their solicitor will use evidence gathered as well as expert testimony to fight for their client, leaving no place for you to hide should your employee or employees pursue this avenue.
The government might also take legal action against you, especially if you’re found guilty of committing a crime. This could involve fines, sanctions, or even closure of your business, depending on the severity of the violation.
Business Closure
In more severe cases, the courts can order the complete closure of your business to reduce the number of times you have to repair these mistakes. If full closure isn’t ordered, you might find yourself under restrictions and compliance orders to prevent further violations of this or a similar nature.
Reputational Damage
Arguably, reputational damage is one aspect of being found guilty of or accused of breaching employee rights or being negligent in these areas. These days, more than ever, people take direct action against businesses they feel don’t hold the same values as theirs, voting with their wallets and withdrawing their business. This can be extremely hard to climb back from, and a poor reputation is difficult to overcome, even if you are allowed to continue trading.
