Bigger penalties for flouting minimum wage rules
January 24, 2014
As part of the government’s crackdown on what is describes as ‘rogue employers’, companies who do not pay their workers the National Minimum Wage (NMW) will face an increased penalty of up to £20,000.
Under the current rules, employers that break the NMW law must pay the unpaid wages plus a financial penalty calculated as 50% of the total underpayment for all the workers that are found to be underpaid. The maximum penalty an employer can face is £5,000.
However, the government now plans to introduce new regulations that will in fact double the penalty cost from 50% to 100% of the unpaid wages owed to workers, while the maximum penalty will increase to £20,000.
This change is expected to come into force in February 2014. It is likely to be strengthened further with additional legislation so that the maximum £20,000 penalty can apply to each underpaid worker.
The Department for Business, Innovation and Skills said the intention is to penalise those with the highest levels of arrears. Employers who are found to have made underpayments of more than £20,000 to any worker after the new laws come into force will not only pay the new higher level of penalties but will face this penalty for each such worker.