New measures to enforce the National Minimum Wage

7 September, 2015
by: Cripps Pemberton Greenish

BIS has introduced what it describes as ‘a package of measures to ensure that hard working people receive the pay they are entitled to.’ The intention behind the measures is to improve compliance with the national minimum wage (currently at £6.50 per hour for adults over 21) and the national living wage (expected to be £7.20 per hour for those aged 25 and over when it is introduced in April 2016).

BIS has not confirmed implementation dates yet, but sets out the following measures:

  1. The penalty for failure to comply will double to 200% of the arrears due. Rather like parking tickets, the penalty will be halved if paid within 14 days. The maximum penalty will remain unchanged at £20,000 per worker.
  2. A new HMRC team will be dedicated to considering the most at-risk sectors. These are currently considered to be social care, hairdressing and the retail sector. The team will have power to impose penalties and prosecute employers, as well as naming and shaming employers who fail to comply.
  3. A new penalty for non-compliance will be introduced, requiring enforcement officers to consider disqualifying anyone found guilty from being a company director for up to 15 years.
  4. The enforcement budget will be increased and a new position of Director of Labour Market Enforcement and Exploitation will be introduced.

In addition to these measures, BIS has promised to improve the guidance and support available to employers.

Whilst on the subject of the national minimum wage, don’t forget that the rates go up on 1 October. The new adult rate is £6.70 per hour, the rate for 18 to 20 year olds will be £5.30 per hour and the rate for 16 to 17 year olds will be £3.87 per hour.