`The Chartered Institute of Payroll Professionals
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National living wage / national minimum wage
BEIS release government evidence on National Minimum Wage compliance and enforcement
Published: 18 May 2022 Emailed: 18 May 2022
The Department for Business, Energy and Industrial Strategy (BEIS) has released an overview of the compliance and enforcement action of the National Minimum Wage in 2020/21. HM Revenue and Customs (HMRC) are ultimately responsible for the enforcement of minimum wage regulations. As the period covered by the report overlaps with the coronavirus and its associated restrictions, business activity and enforcement action changed considerably. Despite this, enforcement action sees strong results, with the following key take aways from the report;
HMRC closed over 2,700 cases £16.8 million in arrears were identified
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• 580 penalties were issued, totalling £14.1 million • Enforcement action was targeted at sectors least impacted by Covid-19
HMRC also issued a number of emails, SMS messages and webinars following their “Promote, Prevent and Respond” approach.
Targeted enforcement is becoming the predominant way for HMRC to handle minimum wage breaches, with £14.5 million in arrears being paid to around 139,000 workers in 2020/21.
The report does note that furlough payments have made enforcement action more complex. With these payments not being for hours worked, they are not subject to minimum wage regulations. For this reason, many perceived underpayments may be compliant, potentially this is why sectors least affected by Covid-19 where prioritised.
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Review of the National Living Wage from 2015-2020 Published: 23 May 2022 Emailed: 25 May 2022
Each year the Low Pay Commission (LPC) receive a remit from the UK government in relation to the national minimum wage rates. Within this remit is often an overarching target, the initial target following the 2015 introduction of the National Living Wage (NLW) was 60% of median earnings to those aged 25 or older by April 2020. This target was achieved.
The latest target set is for two thirds of median earnings to be paid to those aged 21 and over by April 2024. The NLW is on track to achieve this target and the LPC are currently consulting on the minimum wage rates for April 2023.
The review of the NLW from 2015-2020 produced the following headline conclusions:
• The National Living Wage raised wages and did not reduce employment… • …but the increase in earnings did not lead to higher incomes • We can find no evidence that the National Living Wage increased productivity • Minimum wage workers were less likely to move employers but continued to progress onto higher pay • Increasing earnings for the lowest-paid helped reduce inequality.
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