Enhanced regulations, due to come into force this month, will see employers who fail to pay their workers the national minimum wage facing an increased financial penalty of up to 100 per cent of the unpaid wages and a higher maximum penalty of up to £20,000.
Alan Matthew, partner at Miller Hendry commented:
“It’s vitally important that employers stay up to date with changes in legislation and ensure their workers are paid in accordance with the levels set, and regularly reviewed, by government. In some industries it can be surprisingly easy to fall foul of the law, where the workforce may consist of individuals across all levels of the minimum wage spectrum, for instance. But even an unintentional lack of attention to detail could now cost them dearly,”
Although these new limits currently await formal Parliamentary approval, the Government is pressing to legislate at the earliest opportunity so that the maximum £20,000 penalty can apply to each underpaid worker.
Currently, the penalty is calculated as 50 per cent of the total underpayment for all workers specified in the Notice of Underpayment issued to employers by HMRC. Where this amount is less than £100, a minimum penalty of £100 is applied. Where this amount is more than £5,000, a maximum penalty of £5,000 is applied. The new regulations will see fines rise by more than 300%.
“The intention of the Government is very clear and it is to penalise those employers with the highest levels of arrears. Their position is that anyone entitled to the National Minimum Wage should receive it and that paying anything less than this is unacceptable, illegal and will be punished by law.”
Employers with concerns about their compliance in this area of their business are urged to seek legal advice.