Research and analysis

An update on the Low Pay Commission’s work on non-compliance and enforcement

Published 19 September 2025

Our role at the Low Pay Commission is to advise the Government on the National Minimum Wage (NMW), including the National Living Wage. Although our core remit is to recommend the level of these rates, the issues of compliance and enforcement are fundamental to minimum wage policy. They ensure that workers’ rights are protected and businesses have a level playing field in which to compete. At the Low Pay Commission, these issues are an important part of the evidence we gather and the advice we give to the Government. Underpayment in particular remains a key issue; in our 2024 report we estimated that 370,000 people were paid less than the legal minimum in April 2024.

This note updates our stakeholders on our publication plans around compliance and enforcement and sets out how we will be taking forward work in this area.

1. Context

We are about to enter a significant period for compliance and enforcement policy. The Government’s Employment Rights Bill Roadmap sets out their intention to establish the Fair Work Agency (FWA) from April 2026. The FWA will draw on the work of existing enforcement agencies (HMRC NMW, as well as the GLAA and EAS), to act as a single enforcement body, delivering an expanded remit.

At the same time, the nature of the workforce affected by the NMW and at risk of underpayment is changing. In particular, we are increasingly mindful of the greater number of salaried workers falling into the scope of the NLW. As discussed in our previous report, we are equally also mindful of the impact of compliance rules on the provision of salary sacrifice schemes, including for workers who may be paid some margin above the NLW, which we discussed in our previous report. We envisage awareness-raising and consideration of how these issues are enforced will be part of the scope of our compliance work in future.

There are major challenges and opportunities in this transition to the FWA. There are clear benefits to a single enforcement body with responsibility for the full range of labour rights. At the same time, expanding the scope of enforcement has the potential to add complexity to the enforcement process. We support the Director of Labour Market Enforcement’s recent recommendation that the FWA should have resources commensurate with its task and the Government’s ambitions for Make Work Pay. The creation of the FWA should not lead to any reduction of resources allocated to minimum wage enforcement.

In our previous reports on compliance and enforcement, we have made a series of recommendations for improving minimum wage enforcement. We believe that many of these will be relevant to the FWA’s operations, and we would highlight in particular the following as things which should be considered as the body is established.

1.1 The FWA should expand the data it collects – and publishes – on its caseload.

In considering what data to collect, it should think about how to deepen internal and external understanding of the nature of underpayment and who is affected by it.

For example, this could mean recording:

• whether underpaid workers are present on PAYE systems or are employed informally. This would be useful in corroborating the picture of underpayment we see in administrative data sources.

• the working arrangements of underpaid workers – to understand to what extent a given contract type or working arrangement (for example, zero-hours contracts) is associated with underpayment.

• demographic data on workers who are underpaid. We know from ASHE that certain groups are more likely to be underpaid than others (for example, women or salaried workers). Knowing about the characteristics of HMRC’s caseload would help tell us if ASHE is a good measure; and would tell us which groups are reached by enforcement and which are not.

Such information should be a key input for the FWA’s Advisory Board. Without this, we’ll only have a limited sense of the impact of the FWA’s work. In its recent publication on compliance and enforcement, the Government has committed to considering how data collection requirements can be improved in the FWA, but rejected changes to existing HMRC practice. It would be a shame if the opportunity were missed to modernise the intelligence picture.

1.2 The FWA should seek to build confidence in the complaints process, including via third-party complaints.

We agree with the Director of Labour Market Enforcement that transparency over the FWA’s work is a priority for external stakeholders. As well as regular publication of reports and data, this should extend to open and collaborative engagement with representative bodies for workers and employers, including via prompt and regular feedback to third parties. The role of the FWA’s Advisory Board will be crucial. We support the incorporation of a social partnership model in the Advisory Board, but that Board must have a meaningful role. We support the comments and recommendations made in the DLME’s 2025/26 Strategy in this area.

1.3 The FWA should learn lessons from the NMW naming round.

This means putting in place more timely and regular publication rounds which act as an effective deterrent. The repeated delays in naming rounds mean that long periods elapse between employers underpaying workers and their appearance in naming rounds. For example, in the most recent round, published in May 2025, the most recent cases dated from 2021, with some extending back as far as 2014. This dilutes the impact of these announcements. It is important the FWA does not inherit these delays and puts in place a process that is regular and timely.

2. Future publications

We will not be publishing a standalone report on compliance and enforcement this year. We have produced annual reports on compliance and enforcement since 2017, with the most recent published in December 2024. Because of a combination of factors, this was later in the year than we usually publish. This report drew on the main evidence sources which serve as the basis for our work on non-compliance:

• our analysis of the 2024 Annual Survey of Hours and Earnings (ASHE).

• submissions to our 2024 call for evidence.

• the Government’s latest published enforcement statistics (up to April 2023).

• The timing of the 2024 report meant we were able to incorporate the latest ASHE data and stakeholder submissions. We therefore plan to delay our next publication on enforcement and compliance until we have another iteration of ASHE to draw on, and until we have had time to review and consider all the responses to our latest call for evidence.

• Our full annual 2025 Report will include analysis of underpayment in the Annual Survey of Hours and Earnings (ASHE). We then plan to produce a standalone report published in the first half of next year.

• Our decision not to publish a standalone report this year does not mean we are any less engaged with these issues. We will continue to work with DBT over the coming period, to put forward our views and the views of our stakeholders as the FWA is brought into operation.