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. The maximum penalty an employer can face is £5,000. Following an announcement by the Prime Minister before Christmas, the government will increase the financial penalty percentage from 50% to 100% of the unpaid wages owed to workers. The maximum penalty will increase from £5,000 to £20,000. Regulations introducing these new limits are subject to Parliamentary approval and are expected to be in force in February 2014.
The government also wants to go further and will bring in legislation at the earliest opportunity so that the maximum £20,000 penalty can apply to each underpaid worker.
Read more from The Department for Business, Innovation & Skills (BIS).
Briefing Note - National Minimum Wage
10 February 2014
A briefing note has been published which provides an update about some important changes to National Minimum Wage policy, which will have an impact on all employers.
What's Changing?
'Naming and Shaming'
From 2011, the Department for Business Innovation and Skills (BIS) has been able to 'name and shame' employers if they employed people who were paid below the minimum wage and the employer's behaviour met certain conditions. Only one employer has been named by BIS since the scheme started. From October 2013, these conditions have been relaxed. This means that every employer who receives a Notice of Underpayment from HMRC will be considered for 'naming and shaming' even if their actions are unintentional. Employers will be able to make representations to BIS against being named. BIS will consider whether naming would carry risk of personal harm to an individual or a family member, pose a national security threat or otherwise not be in the public interest but the expectation is that in most cases details will be published.
You can find full details of the scheme in:
Policy on HMRC enforcement , prosecutions and naming employers who break national minimum wage law [page 19 onwards] Enforcing national minimum wage law .
Higher Penalties
In addition to changes to the 'Naming and Shaming' scheme, the Prime Minister announced in November 2013 that there would be much higher penalties for employers who fail to pay the National Minimum Wage. He said: “We are also clamping down on those who employ people below the minimum wage. They will pay the price with a fine of up to £20,000 for every under-paid employee - more than four times the fine today.”
CIPP Policy News Journal
16/04/2014, Page 250 of 519
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