The National Minimum Wage Act was unveiled in 1998 and came into effect in April 1999. The idea behind it was to protect employees on low wages and ensure they got paid a suitable amount for the work they do. The rate is set each year by the Low Pay Commission (LPC).
The National Minimum Wage (NMW) is enforced by HMRC. In 2013 a bigger push was made to ensure that all employers pay workers in line with the National Minimum Wage. Previously employers found not to do so were issued with a Notice of Underpayment but their names were not released. In October 2013 it was decided that companies found guilty should be named and shamed to prevent them from underpaying their employees.
Recently, the names of an additional 113 employers who failed to pay their employees the NMW were released. The companies come from a range of different sectors including education, social care and retail. Each case was investigated by HMRC before they were publicly named. The total number of employers named since 2013 now stands at 398. In this time £511,000 of penalties have been issued and £1,179,000 of arrears (money that should have been paid to employees) has been repaid.
Businesses in the UK need to ensure they pay staff in line with NMW brackets if they want to avoid the penalties. They will also need to be careful in April 2016 when the National Living Wage (NLW) is introduced for people over the age of 25. This will initially be set at £7.20, a 50p increase over the current minimum wage of £6.70. The LPC will also be responsible for recommending any increases in it in the future.
Businesses looking for advice about payroll, NMW, NLW, or self assessment in North West London can get help from Cohen Accountants. We will provide a bespoke service for each client and ensure you are adhering to all the necessary financial laws and regulations.