A Hampshire-based business advisory group has urged employers to review their payroll processes as tougher enforcement of National Minimum Wage (NMW) rules comes into force.

Accountancy firm Azets says many companies may be breaching complex NMW regulations without realising it, leaving themselves exposed to financial penalties, backdated repayments and reputational damage.

The warning comes after the latest NMW increases took effect in April 2026, raising the hourly rate to £12.71 for workers aged 21 and over, £10.85 for 18-to-20-year-olds and £8 for 16-to-17-year-olds and apprentices under 19 or in the first year of their apprenticeship.

At the same time, the new Fair Work Agency (FWA) is taking on a wider role in enforcing employment rights. HMRC continues to investigate NMW complaints on the agency's behalf, but when fully operational the FWA will oversee areas including holiday entitlement, unlawful deductions from pay and agency worker protections.

Employment tax partner Jez Howson said employers were often caught out by technical aspects of the legislation rather than deliberate underpayment.

He said: "Most employers are trying to comply with the regulations, but the rules are extremely detailed and technical. It's often the seemingly minor issues around working time calculations, payroll deductions or employee expenses that create breaches."

Mr Howson said businesses could inadvertently fall foul of the rules by failing to count all working time correctly.

"We have seen examples where call centre workers were effectively underpaid because employers failed to count the time employees spent on site preparing for call lines to open. Even ten minutes a day can create an underpayment issue and this can become a significant exposure when multiplied across a workforce over several years."

He also warned that deductions from pay could create unexpected problems for employers.

Mr Howson added that holiday pay calculations could become a common area of difficulty, particularly for employers with staff working irregular hours.