by David Watkinson
New measures to enforce compliance with the National Minimum Wage (NMW) and the new National Living Wage (NLW) have recently been announced.
The NLW was announced at the July 2015 Budget and is due to be introduced in April 2016. It will apply to workers aged 25 and above and will initially be set at £7.20 per hour; in effect, it tops up the NMW, which is currently £6.50 and will increase to £6.70 from October 2015.
The new measures include :
– doubling the penalties for non-payment of the NMW and NLW
– increasing the enforcement budget
– setting up a new team in HMRC to take forward criminal prosecutions for those who deliberately do not comply
– ensuring that anyone found guilty will be considered for disqualification from being a company director for up to 15 years.
In 2014/15 HM Revenue & Customs investigated a total of 2,204 cases. It found arrears in 735 of those cases involving 26,318 workers and over £3.29m in underpayments. Penalties in excess of £934,000 were imposed.
In addition to the above financial penalties, HMRC has the power to ‘name and shame’ the worst offenders and to put forward the most serious cases to the Crown Prosecution Service for prosecution.
The calculation of penalties for those employers who do not comply will rise from 100% of arrears to 200%. This will be halved if employers pay within 14 days. The overall maximum penalty of £20,000 per worker will remain unchanged.
There will be a new Director of Labour Market Enforcement and Exploitation who will oversee enforcement of the NMW, the Employment Agency Standards Inspectorate and the Gangmasters Licensing Authority.
In conjunction with the enforcement measures, the government has promised improved guidance and support to help employers with compliance. It will also work with payroll providers to ensure payroll software contains checks that staff are being paid at least the minimum wage. Let us hope that these measures to assist employers to meet their obligation are given as much or more prominence than the financial penalties, although we somehow doubt it!
WatkinsonBlack are pleased to advise on these and other matters. They have considerable experience in all areas of taxation and businesss services, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
