Increase_TaxAgility Accountants LondonEmployers who choose not to pay their workers the National Minimum Wage (NMW) will soon see fines quadruple, with a penalty being put into place of £20,000 per-employee underpaid, plus an added financial penalty of 100% of the unpaid wages owed to workers.

Under previous rules, such employers caught breaking NMW law were required to pay the unpaid wages, plus just 50% of the total underpayment for every worker who has been underpaid. The maximum penalty was also four times smaller, sitting at just £5,000.

Speaking on these changes to the penalty, Business Secretary Vince Cable noted:

Anyone entitled to the National Minimum Wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crackdown on those who do not play by the rules. The message is clear – if you break the law, you will face action.”

Continuing along the same path, the Business Secretary said:

As well as higher penalties, we have made it easier to name and shame employers who fail to pay their workers what they are due. We are working with HM Revenue and Customs to investigate non-compliance and facilitate prosecutions in the most serious of cases. We also make sure that every complaint made to the free and confidential Pay and Work Rights Helpline is looked at.”

Enforcing the Penalty

The government have confirmed that they intend to move forward by penalising employers with the highest levels of arrears. Now, employers who have made underpayments of over £20,000 to any employee (whether just one, or a number of employees) will have to pay these new, higher level penalties once the new legislation comes into force.

Not only that, said employers will face this £20,000 penalty for each and every worker underpaid at this level, creating a significant rise in fines from the previous £5,000 top level penalty. In circumstances in which underpayment to employees, singularly or in a group, is above £20,000 per worker the penalty will remain at the £20,000 level (much as it remained at the £5,000 level under the old legislation).

The Importance of NMW Law

Speaking out on the importance of National Minimum Wage (NMW) law, Vince Cable said; “The National Minimum Wage plays an important role in supporting low-paid workers whilst making sure they can still find work. Enforcing this is a key to fairness in our workforce.”

This ideal, in part, falls in line with the government’s economic policy objective to achieve strong, sustainable, and balanced growth that will be more evenly shared across the country, and between industries; as detailed in the government’s Plan for Growth, published at Budget 2011.

Personalised Advice

To speak with a professional to discuss the changes to NMW legislation, the details surrounding your company payroll, or for any other reason, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.


This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.