Tougher Rules For Employers Failing To Pay National Minimum Wage

Tougher rules are being enforced for employers failing to pay the National Minimum Wage. On the 1st October 2013, the government introduced stricter rules, and it is now easier for them to name and shame these employers who are flouting the National Minimum Wage law.

As of 7th March 2014, further rules have now been imposed, whereby employers who fail to pay their workers the National Minimum Wage will face higher financial penalties of up to £20,000, compared to the previous maximum penalty of £5,000. The penalty percentage has also increased from 50% to 100% of total underpayments.

The government has plans to impose these stricter rules at the earliest opportunity. Paying less than the minimum wage is not only unfair, but illegal. Employers could face up to £20,000 for each individual worker that has been underpaid, rather than the maximum fine applying to each employer. In more serious cases, employers can also face criminal prosecution. Not only will employers face large penalties, but they could also risk damage to their reputation, as people are put off using a business’ service if it is found guilty of not paying its workers the minimum wage.

Employers have a responsibility to be aware of the different legal rates for the National Minimum Wage, which can vary depending on their workers. Currently, the National Minimum Wage rates are:

  • £6.31 – the main rate for workers aged 21 and over
  • £5.03 – the 18-20 rate
  • £3.72 – the 16-17 rate for workers above school leaving age but under 18
  • £2.68 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

The National Minimum Wage rates change every October, and employers need to ensure they keep abreast of any changes in these rates, and implement them accordingly.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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