21 October 2015

Beware of national minimum wage penalties

Businesses in the UK could be fined £20,000 per worker if they underpay the national minimum wage (NMW).

On 1 October 2015, the NMW rates increased for over 1 million employees, including apprentices. Many are unaware of the financial and legal consequences involved in not paying the correct rate, according to the Department for Business, Innovation and Skills (BIS).

The department carried out a nationwide survey of 1,000 businesses, in which 53 per cent said they did not know it can be a criminal offence and 64 per cent did not know they had to reimburse workers they had underpaid.

The government has announced that businesses could be publicly named and shamed, of which 65 per cent of those surveyed did not realise.

The survey showed that a significant 88 per cent of UK bosses think that the NMW is a good idea - despite many being oblivious to the penalties. Thirty per cent currently employ staff on the NMW.

Of the 1,000 businesses, 84 per cent acknowledged they knew of today's rate increase but only 26 per cent knew that the new rate for people aged 21 and over is £6.70.

According to the ONS Annual Survey of Hours and Earnings, there were around 1.5 million workers in the UK aged over 21 being paid on or below the NMW in 2014.