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Tougher Minimum Wage Sanctions

7th September 2015

The government has recently announced tougher penalties on companies not paying the national minimum wage. The penalties have been designed to ensure that all employees receive the pay they are entitled to and include:

  • Doubling penalties for non-payment of the national minimum wage
  • Increasing the enforcement budget
  • A team of compliance officers at HMRC to prosecute those who deliberately do not comply
  • A Director of Labour Market Enforcement and Exploitation will be appointed to oversee enforcement of the national minimum wage
  • Those found guilty of deliberate non-compliance with the national minimum will be considered for disqualification from being a company director for up to 15 years

Sajid Javid, Business Secretary, said of these new measures: “There is no excuse for employers flouting minimum wage rules... these new measures will ensure that hardworking people get the salary they are entitled to.”

The government has also promised to improve the guidance and support made available to businesses on minimum wage compliance and will work with payroll providers to ensure that payroll software contains checks to help ensure staff are being paid the full amount that they are entitled to.
For your reference, the National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid and rates from 1st October 2015 are as per below:

  • The adult rate will increase by 20 pence to £6.70 per hour
  • The rate for 18 to 20 year olds will increase by 17 pence to £5.30 per hour
  • The rate for 16 to 17 year olds will increase by 8 pence to £3.87 per hour
  • The apprentice rate will increase by 57 pence to £3.30 per hour

From April 2016, the mandatory National Living Wage (NLW) will apply for workers aged 25 and over. This will initially be set at £7.20 (i.e. a 50p per hour increase on the current adult minimum wage). This represents an increase of around £1,200 per year for a full-time worker on the current national minimum wage. Please note: the national minimum wage will continue to apply for those aged under 25.
If you would like help with payroll or have questions about the national minimum wage or national living wage, call us on 01634 846233.

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