National Minimum Wage (NMW) penalties to increase | Exchange Accountancy Services

National Minimum Wage (NMW) penalties to increase

Employers have been warned recently that schemes setting out to avoid payment of wages to employees at the minimum rates set by the National Minimum Wage regulations will be penalised. Currently, employers found lacking in this area will be required to make up the unpaid wages and pay fines which can be up to 50% of the total arrears, capped at £5,000 for each notice of underpayment issued by HMRC.

These penalties are due to be increased. If new regulations being debated in Parliament are approved the penalties payable for non-observance of the NMW rules will be:

  • Fines amounting to 100% of the unpaid wages.
  • The maximum penalty for each notice of underpayment increased to £20,000

 Further legislation is proposed to ensure that the £20,000 fine is applied to each underpaid worker.

 As of October 2013, the current NMW rates are:

  • Apprentices under age 19 or those in the first year of their apprenticeship: £2.68 per hour.
  • Under 18: £3.72 per hour.
  • Between 18 and 20 years: £5.03 per hour.
  • Age 21 and over: £6.31 per hour.

Employers should also keep an eye on the rulings of Employment Tribunals. A recent case, for instance, has determined that certain classes of employees should be paid for travelling time.

With the proposed increases in the penalty regime it is now imperative that employers review their pay rate structures to ensure that they are compliant with NMW requirements. Take professional advice now if you are at all unsure of your obligations. Don’t wait for the grey suits to turn up on your doorstep requesting to audit your pay records.