The Department for Business, Innovation & Skills (BIS) has published a revised enforcement policy for dealing with national minimum wage (NMW) infringements.
Since October 2013, HM Revenue & Customs (HMRC) has robustly enforced a ‘naming and shaming’ scheme, issuing heavy fines to employers that are found to be paying their staff below the NMW. On 1 April 2016, the fine for non-compliance increased from 100 per cent to 200 per cent of the arrears an employer owes. This coincided with the introduction of the National Living Wage (NLW), which currently entitles workers aged 25 and over to a minimum wage of £7.20 per hour.
The new enforcement policy paper sets out how the revised scheme to name employers who break the law works, along with details of measures to increase compliance. These include the appointment of a statutory Director of Labour Market Enforcement, who will set priorities for enforcement bodies across the field of non-compliance. There will also be a new type of enforcement order, a labour market enforcement (LME) undertaking, for employers who deliberately and persistently breach labour laws, including breaching the NMW. An LME undertaking will require a business to take reasonable steps to ensure compliance in future. It will be backed by a criminal offence for non-compliance. These changes have been introduced under the Immigration Act.
Is your business accidentally paying below the minimum wage?
The employment status of staff such as apprentices, interns and directors can be uncertain, and employers must be careful not to accidentally underpay them.
For expert advice on this or any area of employment law please contact Gaby Hardwicke Employment Law Partner Paul Maynard: