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The Law Society - Conveyancing

08

Aug

2014

National Minimum Wage Increase from October 2014 and Increased Penalties for Employers in breach

The National Minimum Wage will increase from October 2014 from the current hourly rates (shown in table below)   There are no exemptions according to the size of business employing, and employers who do not pay the National Minimum Wage can be prosecuted by HM Revenue and Customs –  There are a few limited categories of worker who are not entitled to the National Minimum Wage, including volunteers, company directors and the self-employed.

From March 2014 employers who fail to pay the National Minimum Wage to eligible workers will face increased penalties, representing up to 100 per cent of the wages in arrears to be paid in penalties in addition to the refund of the same amount to the worker in question.  This means a rise in penalties from a maximum of £5,000 to  £20,000 per employer, and the Government is further seeking to increase this penalty to make it applicable per worker. In the most serious cases, employers may also find themselves facing criminal prosecution.

Last October also saw the introduction of the ‘naming and shaming’ of employers in breach of the regulations, with five employers recently named under the scheme.

The new rates will be as follows (in bold):

Category of worker             Rate from 1st Oct 2013     Rate from 1st Oct 2014

Aged 21 and over                              £6.31                                       £6.50

Aged 18—20yrs                                 £5.03                                      £5.13

Aged 16-17                                          £3.72                                      £3.79

(above school leaving age but under 18)  

Apprentices under 19 or in           £2.68                                     £2.73

1st year of apprenticeship             

It is important to note that these rates, which come into force 1 October 2014, apply to pay reference periods beginning on or after that date.   Different rates previously applied to agricultural wages, but since 1st October 2013 both agricultural and horticultural workers have been incorporated into the National Minimum wage rates, subject to the terms of their contracts if before that date.

For full advice on employment law issues, please contact Lucy Thomas at our Cockfosters Office.

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