Employers flouting national minimum wage to face 200% penalties

The government has announced plans to double penalties for employers who fail to pay the National Minimum Wage and the new National Living Wage when it comes into force in 2016


It will strengthen the current HMRC compliance team and set up a new team in HMRC to take forward criminal prosecutions for those who deliberately do not comply. Anyone found guilty will be considered for disqualification from being a company director for up to 15 years.

A new team of compliance officers in HMRC will investigate the most serious cases of employers not paying the National Minimum Wage and National Living Wage when it is introduced in April 2016.

The team will have the power to use all available sanctions, including penalties, prosecutions and naming and shaming the most exploitative employers.

Penalties for non-compliance will be doubled 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 remains unchanged.

The enforcement budget for the National Minimum Wage and Living Wage will also be increased in 2016 to 2017. Future budgets will be agreed as part of the Spending Review process.

In 2014 to 2015, HMRC investigated 2,204 cases; found arrears in 735 cases for 26,318 workers totalling over £3.29m and issued over £934,000 in penalties.

Business secretary Sajid Javid said: ‘There is no excuse for employers flouting minimum wage rules and these announcements will ensure those who do try and cheat staff out of pay will feel the full force of the law.’

A new director of labour market enforcement and exploitation will be created to oversee enforcement of the National Minimum Wage, the Employment Agency Standards Inspectorate and the Gangmasters Licensing Authority (a non-departmental public body of the Home Office). The director will set priorities for enforcement based on a single view of the intelligence about exploitation and non-compliance.

A consultation will be launched in the Autumn on the introduction of a new offence of aggravated breach of labour market legislation. The consultation will also propose giving the Gangmasters Licensing Authority additional investigatory powers and a wider remit to tackle serious labour exploitation more effectively.

The government has also announced it will improve the guidance and support made available to firms on compliance and will work with payroll providers to be sure payroll software contains checks that staff are being paid what they are entitled to.

HMRC currently enforces the National Minimum Wage on behalf of the Department for Business, Innovation and Skills.

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