Having been introduced originally in 1999, the National Minimum Wage is affecting more businesses across the UK as the rates continue to rise.
The National Minimum Wage has risen nearly 17% since 2010 and is due to rise to £7.05 (for 21 to 24 year olds) from April 2017.
That increase doesn’t taken into account the higher National Living Wage for workers aged at least 25. Introduced in April 2016, the current National Living Wage is £7.20 per hour and is set to rise to 7.50 per hour in April 2017.
With the current Chancellor targeting a rate of £9 per hour by 2020, businesses now more than ever should be ensuring that they are comfortable that their employees are being paid at least the minimum rates, especially in light of recent decisions from the European Court which have meant additional hours need to be included in the calculation (such a travel time for peripatetic workers).
Whilst disputes over wages should be discussed between the employer and employee initially, ultimately enforcement of the minimum wage (along with other statutory payments such as maternity pay) is the responsibility of HMRC. Disputes are often swiftly resolved as employers are quick to rectify their errors, but expect HMRC to increasingly use “name and shame” tactics to enforce compliance with the rules and raise awareness of employers’ obligations.
The government has named 360 businesses which have failed to pay either the National Minimum Wage (NMW) or the National Living Wage (NLW).
More than 15,500 workers had to be paid back nearly one million pounds.
Excuses used by businesses for not paying the full basic wage included using tips to top up their pay, making reductions to pay for a Christmas party, or making staff pay for their own uniforms.