National Minimum Wage - Further reasons to take seriously

National Minimum Wage - Further reasons to take seriously

The Government has confirmed plans to increase the maximum fine for failure to pay the National Minimum Wage from the current £5,000 to £20,000 in a move aimed at clamping down on the rising number of complaints in this area. These new powers are due to come in to force in February 2014.

The move follows statistics released for 2013/2014 which showed that 26,000 workers received reimbursement for underpaid wages during the period, with 708 employers fined for their actions.

In addition to the increased fine, the Government aims to further strengthen the Regulations by ensuring that the new maximum fine could be levied for every worker denied the minimum wage. In addition to the increased fine, a further financial penalty equating to 100% of the underpaid wages can be recovered by HMRC. The move comes on the back of the Governments initiative in October 2013 to publicly name and shame employers who fail to pay the statutory minimum wage.

National Minimum Wage is re-assessed on an annual basis with changes occurring on 1st October every year. The current rates for minimum wage are as follows:

Aged 21+ £6.31 per hour

Aged 18-20 £5.03 per hour

Aged 16-17: £3.72 per hour

Apprentice: £2.68 per hour

In terms of potential future rates, the Chancellor has allegedly made favourable comments recently regarding a recommendation that would raise the minimum wage from £6.31 to £7 an hour from October. Given that the timing of such an increase would be seven months before the general election, you can see why the Government might be incentivised to make a dramatic increase. However, this proposal is still only a proposal at this stage and no firm decisions have been communicated to date as to the October 2014 rates.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.