Government steps up penalties for national wage non-compliance

The government has doubled the penalty fines for employers that do not pay their staff the national minimum wage and new national living wage.


Under the new measures, those found guilty of not paying the appropriate rate will be considered for disqualification from their director role for up to 15 years.

The measures have been put in place in an attempt to ensure workers receive the pay rates set out by the government.

The current national minimum wage rate for those aged 21 and over is £6.50 an hour. The national living wage of £7.20 an hour will apply to those aged 25 and over from April 2016.

The government is also establishing a new team of compliance officers at HM Revenue and Customs (HMRC) to take forward prosecutions for those that deliberately do not comply with the wage legislation. The team will have the power to use all available sanctions, including penalties and prosecutions, as well as naming and shaming.

The calculation of penalties for those that 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 remains unchanged.

The government has also announced that it will improve the guidance and support made available to firms on compliance and will work with payroll providers to ensure payroll software contains checks that staff are being paid the appropriate amount.

In addition, a consultation will be launched in the autumn to look at the introduction of a new offence of aggravated breach of labour market legislation.

Sajid Javid, business secretary, 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.

“The government is committed to making work pay and making sure hardworking people get the salary they are entitled to.”