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Wage Enforcement Measures Announced

A range of measures to ensure that businesses comply with their wage obligations have been announced by the Business Secretary.

The national minimum wage is due to increase form £6.50 to £6.70 for people 21 and over from 1 October 2015. This will be followed by the introduction of the mandatory national living wage for people 25 and above, initially set at £7.20 , in April 2016.

The measures announced include:

  • doubling of the penalties for non-payment
  • a new team to handle criminal prosecutions will be set up at HMRC
  • increasing the enforcement budget 
  • ensuring that those found guilty will be considered for disqualification from being a company director for 15 years.

The increased penalties will be applied to companies who fail to pay their staff at least the minimum wage, will now be 200% of arrears. The penalty will be halved if the company pays the penalty within 14 days, and the maximum penalty for individual workers will remain at £20,000.

The new HMRC team of compliance officers will have a number of powers at their disposal to investigate and prosecute serious cases of non-compliance, including penalties, and naming and shaming.

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.”

John Allan, national chairman for the Federation of Small Businesses, said:

“As well as focusing on enforcement, the government must clearly and proactively communicate the charge to employers – ensuring businesses fully understand what they need to do and when.

“This support and guidance is necessary so small businesses avoid inadvertently falling foul of the changes to the law. In addition, ministers should review the Employment Allowance, which must be set at the right level to help businesses meet the new requirements.”

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