The penalties for failing to pay the national minimum wage and national living wage are high. They amount to 200% of unpaid wages (or 100% if paid within 14 days of any enforcement notice) up to £20k per worker maximum. This is in addition to the unpaid wages payable to the individual (penalties are payable to the government). Any enforcement action will also result in ‘naming and shaming’ on Government websites.
Whilst HMRC’s enforcement action should be sufficient to persuade most solvent and scrupulous employers to pay the NMW/NLW, there are a number of grey areas where HMRC does not tend to get involved. These include cases involving whether travel time between assignments is working time (it is now confirmed that it is), interns who are required to work unpaid for long periods and workers in the ‘gig’ economy who are required to register as self-employed with recent tribunal decisions upholding their status as workers. Worker status entitles an individual to be paid the NMW/NLW in addition to holiday leave.
Enforcement via HMRC for any worker/employee who has not been paid the NMW/NLW is relatively quick and free. But perhaps more resources ought to be allocated for complex cases which require determination by an employment tribunal. Without financial backing, these cases can be expensive and prohibitive for any individual to pursue which defeats the purpose of the national minimum/living wage.
Speaking ahead of the launch of the £1.7m BEIS campaign today, small business minister Margot James said there were ‘no excuses’ for underpaying staff.
‘This campaign will raise awareness among the lowest paid in society about what they must legally receive and I would encourage anyone who thinks they may be paid less to contact Acas [the advisory, conciliation and arbitration service] as soon as possible,” she said.
‘Every call is followed up by HMRC and we are determined to make sure everybody in work receives a fair wage.’