Further NMW Enforcement

Along with the National Living Wage increase in April 2016, the Government will introduce further changes to the National Minimum Wage system by implementing even stronger enforcement of the minimum rates.

The measures include:

  • doubling the penalties for non-payment of the National Minimum Wage and the new National Living Wage;
  • setting up a new team in HMRC to take forward criminal prosecutions for those who deliberately do not comply;
  • ensuring that anyone found guilty will be considered for disqualification from being a company director for up to 15 years;
  • increasing the enforcement budget.

The new HMRC team will have the primary purpose to investigate the most serious cases of non-compliance with the NMW legislation and NLW legislation when it comes into force in April 2016. This team will be given the power to use all available sanctions. Those employers who breach the law could face financial penalties, naming and shaming, and even prosecution. A new Director of Labour Market Enforcement and Exploration role will be created to supervise National Minimum Wage enforcement as well as other teams tackling labour market exploitation.

Current penalties for non-payment of NMW stand at a maximum of £20,000 per worker who has been underpaid. The maximum was increased, only earlier this year, from a maximum of £20,000 per instance of underpayment, regardless of how many workers were affected. When the new legislation is introduced, employers will be issued with a penalty equal to double the amount of the underpayment. This is halved if it is paid within 14 days. The existing £20,000 cap is not set to be changed.

Consultation is scheduled for the autumn. It will consider the Government’s proposition of a new criminal offence of aggravated breach of labour market legislation. Alongside with this, more guidance and support documents regarding compliance will be published for the benefit of businesses.

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Nicola Mullineux

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