Government’s national minimum wage crackdown continues…
20th January, 2014
The Government has announced that it intends to intensify its crackdown on employers who do not pay their workers national minimum wage (NMW).
Employers can be investigated at any time by HMRC and those who are found to have failed to pay their workers NMW are subject to financial penalties based on the total amount of underpayment. The Government intends to increase the financial penalties imposed on employers from February 2014.
What are the changes?
We expect to see the following changes from February
- The maximum penalty for non-payment of NMW to workers will increase from 50% of the total underpayment to 100%
- The maximum financial penalty will increase from £5,000 to £20,000
What does this mean for me?
An announcement made in December 2013 confirmed that, following a two year HMRC investigation in to NMW practices in the care home sector, penalties of over £110,000 had already been issued to employers in breach. We expect that HMRC will now wait for these new powers to come into force before conducting any further, possibly higher profile, investigations.
If your business is investigated the potential financial liability will increase to the total amount of an underpayment notice (being the total underpayment of NMW to all workers within the business) plus a penalty of 100% of that total (up to a max of £20,000). There are also potential criminal implications for employers who consistently underpay workers.
What can I do to protect my business?
In order to assess your organisation’s risk, financial exposure and potential liability to a NMW investigation conducted by HMRC, we recommend that you conduct an internal audit, whilst seeking to maintain legal privilege.
Ward Hadaway have developed a specific desktop audit product, which we offer at a fixed fee, to assist our clients in determining their risk and potential exposure in a simple and cost effective way.
For further information on this product, these changes or your employment / HR requirements generally, please get in touch.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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