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Law for Business

Knowhow - guidance - precedents

24 FEB 2014

Minimum Wage: Maximum Fine to Increase to £20,000

Pam Loch

Managing Partner

@LochLaw

Currently the National Minimum Wage rates apply to workers over 16 years of age. The penalty for failing to pay workers the national minimum wage is 50 per cent of the underpaid amount.

For amounts of £100 or less, a minimum penalty of £100 applies. Where the underpayment is greater than £5,000 a maximum of £5,000 is applied. Currently for employers who reimburse their workers within 14 days of the Notice of Underpayment being issued by HMRC, the fine applied is reduced by 50 per cent.

The maximum fine however is set to increase. Employers will become liable for up to 100 per cent of the unpaid wages and a higher maximum fine of £20,000. It is still not clear at this point if the new legislation will include the 50 per cent reduction if the workers are paid the underpayment within 14 days of the notice being issued.

These increases follow on from last year's changes, making it easier to identify employers failing to pay the national minimum wage. Previously, HMRC would only refer cases to BIS where the sum unpaid was at least £2,000 and the average owed to each worker was £500 as well as meeting over criteria.

Under the new changes employers who do not appeal within 28 days or are unsuccessful in an appeal, may also be named by BIS publically. If BIS decides to do that a business then has 14 days to satisfy the BIS that it meets the following criteria;

  • Naming will risk harm to an individual or their family
  • There is a national security risk involved
  • That it would not be in the public interest to disclose their name

It is therefore important that all businesses are aware of these new changes and ensure they are meeting the national minimum wage obligations.

 

Pam Loch, Managing Partner of niche employment law practice, Loch Associates Employment Lawyers and Managing Director of HR Advise Me Limited.  

 

For more information on Loch Associates Employment Lawyers please go to www.lochassociates.co.uk and for HR Advise Me go to www.hradvise.me

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