14 March 2014 #Employment
In January we reported that the Government had published draft regulations increasing the financial penalty for employers who fail to pay their workers national minimum wage. The final regulations – The National Minimum Wage (Variation of Financial Penalty) Regulations 2014 - have now been published and came into force on 7th March 2014. These regulations increase the financial penalty from 50% of the total underpayment to 100% and raise the cap on this penalty from £5,000 to £20,000.
In addition, the Government has also published The National Minimum Wage (Amendment) Regulations 2014 (also in force from 7th March 2014) which make clear that a worker will not qualify for national minimum wage for work done as part of a traineeship in England. For the purposes of this exemption the traineeship must; include a work experience placement and work preparation training, last a maximum of six months, be funded wholly or in part by the Secretary of State or the Chief Executive of Skills Funding and be aimed at persons between 16-24 (or 16-25 in the case of persons subject to learning difficulty assessments).
Given the rise in financial penalties, employers would be wise to review their pay structures. This would be particularly prudent in light of the Government’s intention to crack down further on national minimum wage violations by applying the maximum penalty to each underpaid employee.