Today's naming and shaming by Government of 359 businesses who have failed to pay either the National Minimum Wage or National Living Wage highlights the reputational risk for companies of non-compliance with legal requirements.
When making an acquisition, due diligence on HR issues relating to pay, whether that be meeting minimum pay requirements, levels of historic holiday pay or bonus structures, is key. Reliance on warranties and indemnities is just one piece of the armoury designed to protect the buyer against the financial cost associated with past non-compliance (subject to negotiated limitations), but the reputational risk can have a far greater adverse impact on a business than some of the sums referred to in today's announcement.
Calculations by the Office for National Statistics show that the problem extends to hundreds of thousands of jobs and publicity around today's press release may raise the likelihood of claims being made by others.
Scrutiny on these issues at the outset of a transaction, particularly in those sectors where the issue is more prevalent, is needed.
The government has named 360 businesses which have failed to pay either the National Minimum Wage (NMW) or the National Living Wage (NLW).