The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.
If you are an employer - and if you are an employee - you will interested in the latest news about the National Minimum Wage and the new National Living Wage.
The Government has announced it is getting tough on National Minimum Wage (NMW) sanctions
It has announced a package of measures, including tougher NMW penalties, to ensure employees receive the pay they are entitled to.
The measures include:
- doubling the penalties for non-payment of the NMW and the new National Living Wage
- increasing the enforcement budget
- setting up a new team in at taxman HQ at HMRC to take forward criminal prosecutions for those who deliberately do not comply
- ensuring that anyone found guilty will be considered for disqualification from being a company director for up to 15 years
“There is no excuse for employers flouting minimum wage rules and these announcements will ensure those who do try and cheat staff out of pay will feel the full force of the law.
“This ‘one nation’ Government is committed to making work pay and making sure hardworking people get the salary they are entitled to.”
The Government has announced the introduction of a new team of HMRC compliance officers who will investigate the most serious cases of employers not paying the NMW and National Living Wage.
The team will have the power to use all available sanctions, including penalties, prosecutions and naming and shaming the most exploitative employers.
Employers who fail to pay employees the minimum wage will have to pay penalties which will be up to twice what they currently are. This reform is intended to increase compliance and make sure those who break the law face tough consequences.
The calculation of penalties on those who do not comply will rise from 100% of arrears to 200%. This will be halved if employers pay within 14 days. The overall maximum penalty of £20,000 per worker remains unchanged.
In other changes, a new Director of Labour Market Enforcement and Exploitation will be created to oversee enforcement of the NMW, the Employment Agency Standards Inspectorate and the Gangmasters Licensing Authority.
The Director will set priorities for enforcement based on a single view of the intelligence about exploitation and non-compliance.
A consultation will be launched on the introduction of a new offence of aggravated breach of labour market legislation.
The consultation will also propose giving the Gangmasters Licensing Authority additional investigatory powers and a wider remit to tackle serious labour exploitation more effectively.
The Government has also announced they will improve the guidance and support made available to businesses on compliance.
They will also work with payroll providers to be sure payroll software contains checks that staff are being paid what they are entitled to.
Of course, if you would like help with payroll or employment issues, please do get in touch with the team at Clay Shaw Butler.
HMRC first introduced a policy of naming non-compliant employers in 2013.
Since then, 285 employers, who have owed more than £788,000 in arrears, have been charged more than £325,000 in penalties. HMRC puts forward the most serious cases of non-compliance to the Crown Prosecution Service for prosecution.
In 2014 to 2015, HMRC investigated 2,204 cases; found arrears in 735 cases for 26,318 workers totalling more than £3.29 million; charged more than £934,000 in penalties.
The current National Minimum Wage rates (the system changed on October 1) are:
- adult rate (21 years old and over) - £6.70 per hour
- 18 to 20-year olds - £5.30 per hour
- 16 to 17-year olds - £3.87 per hour
- apprentice rate - £3.30 per hour
From April 2016, the Government will introduce a new mandatory National Living Wage (NLW) for workers aged 25 and above, initially set at £7.20 – a rise of 70p relative to the old (pre-October) National Minimum Wage (NMW) rate, and 50p above the increase coming into force in October. That’s a £1,200 per annum increase in earnings for a full-time worker or the current NMW.
The Government published the Low Pay Commission’s (LPC) new remit on 8 July 2015.
The Government is asking the LPC to recommend the level of the path of the National Living Wage going forward, with the target of the total wage reaching 60% of median earnings by 2020.
The LPC will also continue to provide recommendations for the other NMW rates as they have done previously.
You can find out more about money matters on the new-look Clay Shaw Butler website (under our news for business section) -
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