National Minimum Wage penalties increased

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Following the 1 October 2013 increases in the National Minimum Wage (NMW) the current rates are as follows:
  • Adult rate (21 and over) £6.31 an hour
  • Development rate (18 to 20) £5.03 an hour
  • Young workers rate (under 18 and above compulsory school age but who are not apprentices) £3.72 an hour
  • Apprentices £2.68 an hour

On 15 January 2014, the government announced a significant increase in the penalty for employers who do not pay the NMW from £5,000 to £20,000 in February 2014. The date is still to be confirmed. Interestingly, further legislation is expected in due course whereby the £20,000 penalty can apply to each underpaid worker.

As well as higher penalties as a measure to tackle rogue employers, the government is taking steps to make it easier to name and shame those employers and is working with the HMRC to investigate non-compliance and facilitate prosecutions in the most serious cases.

The NMW has become a very topical issue. For instance, on 16 January 2014 George Osborne backed an increase in the NMW to £7 an hour and back in November 2013, Ed Miliband said that he plans to offer tax breaks to employers if they pay the Living Wage. Many employers have signed up to provide this which is estimated to be £7.45 and hour in the UK and £8.55 in London.