At the end of last week, the Government named and shamed another batch of 113 employers for failing too comply with the national minimum wage (“NMW”). We are not going to name names, but see here if you missed the press coverage last week. Whilst most of the employers named to date are smaller employers, several household names have been named: all very embarrassing for the HR teams concerned!
The press coverage obtained as a result of this policy of “naming and shaming” is intended to drive compliance more generally. This means that HMRC, who enforce NMW compliance, are currently on the look out for high profile scalps, so that the headline writers do not get bored.
Making sure that employers comply with NMW legislation is a key Government policy and the enforcement mechanisms have been strengthened by successive Governments. Enforcement powers include:
We don’t mind admitting that some of the NMW legislation is devilishly complicated. It is noteworthy that the sanctions described above apply to employers whose breaches are accidental.
Employers who refuse or wilfully neglect to pay the NMW face criminal sanctions. In reality only the worst offenders are likely to face a criminal prosecution but it remains a powerful sanction.
Last month, the Government announced new enforcement measures. These include increased funding for NMW enforcement with a focus on high risk sectors (including social care and retail). Company directors will also face disqualification.
The Government have also announced the introduction of a national living wage. This is not to be confused with the national living wage recommended by the Living Wage Foundation which sets a voluntary wage rate of £7.85 an hour outside London and £9.15 an hour in London.
The Government’s living wage will effectively add an enhanced NMW rate for those workers over 25. The current NMW wage rate for adults is £6.70 per hour. The Government’s living wage will be £7.20 per hour when introduced in April 2016. The stated intention is that that will increase to £9 an hour by 2020.
These higher rates mean that more businesses will have workers who are at risk of being inadvertently underpaid. Most obviously at risk are:
Most of our clients are City based employers for whom NMW issues are not a great concern, but they remain of interest for the following reasons:
The Government are also expected to consult on the introduction of a new offence of aggravated breach of labour market legislation. It is not known exactly what this will cover, but it forms part of a noticeable trend towards criminalising employers who breach key employment laws.