Under new government rules expected this month, rogue employers who flout National Minimum Wage rules will face higher penalties. We report on these new tougher penalties.
Currently employers that break National Minimum Wage (NMW) laws by, for example, not complying with the current payment limits face being ordered to pay firstly, the unpaid wages and secondly, a financial penalty calculated as 50% of the total underpayment for all workers found to be underpaid. The maximum penalty an employer can face is £5,000.
However, from February 2014 we expect the financial penalty percentage will increase from 50% to 100% of the unpaid wages owed to workers. The maximum penalty will also increase from £5,000 to £20,000. Regulations introducing these new limits are subject to Parliamentary approval and are expected to be in force in February 2014. Employers also face being “named and shamed” for flouting the NMW rules.
Current NMW Rates
There are currently three aged based NMW rates and an apprentice rate, which are usually updated in October each year. The rates that apply from 1 October 2013 are as follows:
- for workers aged 21 years or more: £6.31 per hour
- for workers aged 18 to 20 inclusive: £5.03 per hour
- for workers aged under 18 (but above compulsory school age): £3.72 per hour
- for apprentices aged under 19: £2.68 per hour
- for apprentices aged 19 and over, but in the first year of their apprenticeship: £2.68 per hour
Apprentices aged 19 or over who have completed one year of their apprenticeship are entitled to receive the NMW rate applicable to their age.
The NMW applies to all workers whether temporary, casual, agency, full or part time. The only exceptions are the true self employed and children of compulsory school age.
The government has said it intends to work closely with HM Revenue and Customs to investigate and prosecute those seriously offending employers. There are also further government plans which could see that the maximum £20,000 penalty apply to each underpaid worker! If any employers had on their 2014 “To Do” list to check pay structures, now is the time to bring the review to the top of the list.
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