Minimum wage: rogue employers face greater fines

Employers who do not pay their workers the national minimum wage (NMW) will face a greatly increased penalty under stricter regulations expected within the next few weeks.

Non-compliant firms currently face a sanction of all unpaid wages and a fine calculated as 50% of the total underpayment for all employees affected to a maximum of £5,000, which is reduced half if the unpaid wages are settled within 14 days.

The new regime will increase the penalty to 100% of the unpaid wages, with the cap rising to £20,000.

The government’s intention is to penalise employers with the highest levels of arrears. Employers found to have made underpayments of more than £20,000 to a worker after the revamped laws come into force will not only pay a higher fine but also face a financial sanction for each individual employee who has not received at least the NMW.

Where the underpayment for an employee or group of employees exceeds £20,000, the penalty will be restricted to £20,000 in relation to that worker or group.

The new percentage limits are scheduled come into force in February, subject to parliamentary approval. The government is also planning to bring in rules that will allow the maximum £20,000 fine to apply to each underpaid worker.

Business secretary Vince Cable said, “As well as higher penalties, we have made it easier to name and shame employers who fail to pay their workers what they are due.

“We are working with HMRC to investigate non-compliance and facilitate prosecutions in the most serious of cases,” he added.

Issue: 4436 / Categories: News , Investigations