COMPLIANCE
Using this information, the LPC drafts recommendations for new rates. While the government isn’t obliged to follow their advice, it generally accepts the recommendations and implements the new minimum wage rates through legislation. The last year, of course, saw the general election, and the election of a majority Labour government. Soon after the election, the new government published an updated remit to the LPC. The updated remit asked them to consider the cost of living, alongside other factors, when recommending a new NLW rate and to make progress in narrowing the gap between the NLW rate and the 18-20-year- old NMW rate. By incorporating these new elements, the updated remit reflected progress towards achieving the ambitions in Labour’s election manifesto – to deliver a genuine living wage, and to move towards a single rate for all adults. The LPC responded promptly to this new remit and delivered its recommendations on time in October 2024. Challenges and breaches HM Revenue and Customs (HMRC) is responsible for enforcing the law on minimum wage. It investigates cases where workers may not be paid the minimum wage, through conducting routine inspections and responding to complaints made by workers or third parties. Workers who believe they aren’t being paid the minimum wage can report their employer to HMRC. The process is free, and
workers can remain anonymous if they wish. If an employer is found to be in breach of the minimum wage law, HMRC can impose financial penalties; employers are required to pay back any underpaid wages to the affected workers, along with a penalty of up to 200% of the owed amount. “By working together, we can all help to deliver change and to make work pay for working people across the United Kingdom” In some cases, employers who fail to comply with the minimum wage laws may be publicly named. This serves as a public deterrent. While some employers deliberately underpay their staff, most breaches to the law involve inadvertent underpayments, often due to employers not familiarising themselves with the detailed regulations. It’s important employers take time to understand what’s required of them, to avoid a breach. Payroll professionals have a special responsibility to ensure their organisation remains compliant, by keeping accurate and up to date records
and providing advice to their colleagues. Common areas in which the law may be breached without the intention to do so include, but aren’t limited to: l unpaid working time, including mandatory duties at the start or end of a worker’s shift l failure to increase a worker’s pay once the rates have gone up in April, or when the worker turns 18 or 21 l deductions which take a worker’s pay below the minimum wage l incorrect use of the apprentice rate. Additional guidance is available at GOV. UK, here: https://ow.ly/rkv550VpUQz. If an employer, payroll professional or anyone else involved would prefer to speak to someone, they can call the Advisory, Conciliation and Arbitration Service helpline on 0300 123 0116 (Monday to Friday, 8am to 6pm). They offer free and confidential advice and have a translation service. Additionally, HMRC’s NMW Promote Team carries out a lot of activity to support employers to pay the minimum wage correctly. It continues to strengthen and enhance these activities, expanding coverage with aims to contact large numbers of employers, helping to educate them on their responsibilities. The minimum wage rate increases this year mark a significant milestone for both employers and workers, with payroll professionals playing a crucial role in transforming policy into action. By working together, we can all help to deliver change and to make work pay for working people across the United Kingdom. n
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| Professional in Payroll, Pensions and Reward |
Issue 109 | April 2025
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