The Government has confirmed that employers who fail to pay their workers the national minimum wage (NMW) will face an increased financial penalty of up to 100 per cent of the unpaid wages, the maximum penalty being £20,000. Regulations introducing these new limits are expected to come into force in February 2014. The Government also intends to legislate at the earliest opportunity so that the maximum £20,000 penalty can apply to each underpaid worker.

Currently, the penalty is calculated as 50 per cent of the total underpayment for all workers. Where this amount would be less than £100, a minimum penalty of £100 is applied. Where this amount would be more than £5,000, a maximum penalty of £5,000 is applied. The penalty is reduced by 50 per cent if the unpaid wages are paid within 14 days. It is not clear whether the fine will still be reduced if paid within 14 days under the new penalties scheme.

Comment

Paul Burton, Employment Associate says, “The increase in the penalties for non-payment follows changes made last year to make it easier to ‘name and shame’ employers who fail to pay the NMW. There has been a rise in the number of employers paying less than the NMW, particularly in relation to immigrant workers. Employers should ensure that they are meeting the NMW requirements, especially if they provide accommodation and subsistence to workers.”

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