17 January 2014 #Employment
The government has published draft regulations under which employers who fail to pay workers the national minimum wage (NMW) will face tougher penalties from next month. The maximum fine for anyone failing to pay the statutory level is set to increase from £5,000 to £20,000.
The NMW for the period 1 October 2013 to 30 September 2014 for adults is set at £6.31 an hour. The hourly rate for 18-20 year olds is £5.03 and for 16-17 year olds is £3.72.
Currently, employers that break NMW law must pay the unpaid wages plus a financial penalty calculated as 50% of the total underpayment for all workers found to be underpaid, up to a maximum of £5,000. The penalty is reduced by 50% if the unpaid wages are paid within 14 days. In addition, those who flout the rules face being named and shamed by HMRC.
The government will increase this penalty to 100% of the unpaid wages owed to workers, with the maximum penalty increasing to £20,000. Regulations introducing these new limits are subject to Parliamentary approval and are expected to be in force in February 2014.
According to the government press release, they also want to go further and aim to bring in legislation at a later date under which the maximum £20,000 penalty can apply to each underpaid worker, where employers have made underpayments of more than this sum to any individual worker.
Business Secretary Vince Cable said, “The National Minimum Wage plays an important role in supporting low-paid workers whilst making sure they can still find work. Enforcing this is a key to fairness in our workforce.”