According to the Government’s latest Labour Market Enforcement Strategy report, HM Revenue & Customs (HMRC) is to receive an additional £5.3 million of funding in 2017/18 to ensure businesses are paying employees the national minimum wage (NMW) and national living wage (NLW).
This follows on from a previous increase of £20 million in 2016, which has allowed the team to expand to more than 360 members of staff.
According to the report, it is estimated that there were 362,000 jobs paying less than the NMW or NLW in April 2016, which equates to around 1.3 per cent of all UK employee jobs.
Within its findings, the Government flagged up accommodation and food services, the wholesale and retail trade and other services such as hairdressers and beauty as the worst offenders.
Shockingly, of those who were underpaid, more than 40 per cent received wages that were at least 50p an hour below the NLW.
It is thought that this high rate of underpayment was what led to the increase in penalties on arrears from 100 per cent to 200 per cent in April 2016.
Currently, HMRC enforces non-compliance with the statutory wage legislation in five ways:
- Ensuring that the wage arrears are paid to the worker;
- Civil penalties of up to 200 per cent of the arrears owed per worker up to £20,000;
- A naming scheme under which the Department for Business, Energy and Industrial Strategy (BEIS) will name all employers who owe their workers over £100;
- The new regime of labour market enforcement undertakings and orders;
- And criminal investigation possibly resulting in a prosecution by the Crown Prosecution Service (CPS).
Depending on the severity of the case employers can face one or all of the penalties listed above, so it pays to ensure that a business is compliant with the current NMW and NLW requirements.
At The Fish Partnership, our payroll team can manage all of the necessary changes to your payroll so that your employees’ pay is accurately adjusted in line with any recent changes. We can also offer advice and support relating to all aspects of auto-enrolment. For more information about our payroll services, please contact us.