It is of course that time of year when the National Minimum Wage increases and this year is no exception, the minimum amounts which must be paid from 1st October 2015 are as follows:-
The rate for those aged 21 years and over increases from £6.50 to £6.70 per hour *
The rate for 18 to 20 year olds increases from £5.13 to £5.30 per hour
The rate for 16 to 17 year olds increases from £3.79 to £3.87 per hour
The rate for apprentices increases from £2.73 to £3.30 per hour
* From April 2016, the government will introduce a new mandatory National Living Wage (NLW) for workers aged 25 and above, initially set at £7.20 per hour – which is a premium of 50 pence on top of the adult rate effective from 1st October 2015. The National Minimum Wage (NMW) will continue to apply to those who are aged between 21 – 24 years.
The Department for Business, Innovation & Skills (BIS) recently announced a package of measures intended to improve compliance with the National Minimum Wage (NMW) and the National Living Wage (NLW) when the latter is introduced in April 2016. Non-compliant employers will face higher fines and will potentially be disqualified from holding company directorships.
BIS have not given details of when the measures will come into force. The measures include the following:
- Doubling the penalties for non-payment of the NMW and NLW. Penalties will increase from 100% of arrears to 200% of arrears but will be halved if employers pay within 14 days. The overall maximum penalty of £20,000 per worker remains unchanged.
- The establishment of a new HMRC team dedicated to pursuing the most serious cases of employers deliberately not paying the NMW and NLW. The team will have the same powers currently exercised by HMRC including the imposition of penalties, referring cases to the Crown Prosecution Service for criminal prosecution and naming and shaming the worst-offending employers. BIS revealed that HMRC’s current approach is to target the high-risk areas for non-payment of the NMW, which are currently the social care, hairdressing and retail sectors.
- The introduction of a new penalty of disqualification from being a company director for up to 15 years for the non-payment of the NMW and NLW.
- The creation of a new position called the Director of Labour Market Enforcement and Exploitation, which will oversee enforcement of the NMW and NLW, the Employment Agency Standards Inspectorate and the Gangmasters Licensing Authority.
- The government has pledged to improve the guidance and support made available to employers and work with payroll providers to make sure that payroll software incorporates mechanisms to ensure compliance with the NMW and NLW.
If you have any queries in relation to the National Minimum Wage or the introduction of the National Living Wage, please do not hesitate to contact the HR Consultancy team.