Statutory Instruments were laid mid-January to effect an interim change which will quadruple the maximum existing penalty, (from £5,000 to £20,000) and charge 100% of the total underpayment, rather than 50% as at present. The 50% reduction for paying all arrears within 14 days remains. This change is expected to come into effect for pay reference periods from early March 2014. Primary legislation to give effect to the £20,000 penalty, per worker, is timed for the end of 2014.
Background
HMRC administers and enforces NMW on behalf of the Department for Business Innovation and Skills (BIS). The NMW team has around 160 staff spread across 18 locations tackling non-compliance by employers - ranging from large national retailers to small local businesses. Complaints are passed on to the NMW team from the Pay and Work Rights Helpline for examination and the team also does some risk assessed work which isn't complaints driven. Last year out of 2645 referrals, arrears were identified in 736 of them. Sometimes the failures to pay the right amount are deliberate but at other times the employer has misunderstood what's required of them or even just used incorrect personal details such as dates of birth, (the rates can change on birthdays).
Low Pay Commission recommends new National Minimum Wage rates
28 February 2014
The Low Pay Commission has recommended that the adult NMW rate should increase by 3 per cent on 1 October 2014, from £6.31 to £6.50 an hour.
The recommendations from the LPC are:
the adult rate be increased by 3 per cent to £6.50 an hour; the youth development rate be increased by 2 per cent to £5.13 an hour; the rate for 16-17 year olds be increased by 2 per cent to £3.79 an hour; the apprentice rate be increased by 2 per cent to £2.73 an hour; and the accommodation offset be increased by 3.5 per cent to £5.08 a day. The Low Pay Commission has published the executive summary executive summary of its 2014 report, together with a letter from the LPC Chair, David Norgrove, to Vince Cable and Ministers. The minimum wage has risen faster than other wages since during the economic slowdown, and the wages of the lowest paid are now higher relative to those of other workers than they have been for decades. However the real value of the minimum wage has fallen, even though the minimum wage has risen faster than other wages, because both it and average wages have been exceeded by inflation. “We have had to balance the risk of recommending more than business and the economy can afford, bearing in mind the pressures on low-paying sectors and small firms, against the risk of doing too little to start to restore the real value of the earnings of the lowest paid. “We do believe however that the economic recovery should this year allow an increase in the real value of the minimum wage, the first increase for at least five years. So we are recommending that the adult rate should increase by 3.0 per cent on 1 October, from £6.31 to £6.50 an hour. This is likely to increase the number of jobs covered by the minimum wage by over a third to around one and a quarter million. David Norgrove said:
CIPP Policy News Journal
16/04/2014, Page 251 of 519
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