Increased penalty for failing to pay National Minimum Wage

Following comments from Chancellor George Osborne that the country can ‘now afford’ to raise the National Minimum Wage, the government is cracking down on employers who break the law by failing to pay staff the legal minimum, currently £6.31 per hour for workers over 21.

Under current rules, those who flout the law are obliged to pay the unpaid wages as well as a penalty that equates to half the unpaid wages they owe all staff who have been underpaid, to a maximum of £5,000.

The government has now announced that it plans to increase the penalty to 100% of the unpaid wages with a maximum enforceable of £20,000. It also wants the maximum £20,000 penalty to apply to each individual underpaid worker.

Business Secretary Vince Cable said: "Anyone entitled to the National Minimum Wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crack down on those who do not play by the rules. The message is clear – if you break the law, you will face action…The National Minimum Wage plays an important role in supporting low-paid workers whilst making sure they can still find work. Enforcing this is a key to fairness in our workforce. The intention is to penalise those with the highest levels of arrears. Employers who are found to have made underpayments of more than £20,000 to any worker after the new laws come into force will not only pay the new higher level of penalties, but will face this penalty for each such worker."

For information on your rights in the workplace please contact Ashley Hunt, Vaishali Thakerar or Carrie-Ann Randall at Lawson-West on 0116 212 1000.

View all