There are penalties for employers who don’t pay staff what they are legally entitled to under the National Minimum Wage (NMW) and National Living Wage (NLW) rates.

Employers who have paid a worker below the correct minimum wage must pay any arrears immediately. If not, there are penalties for non-payment of up to 200% of the amount owed, unless the arrears are paid within 14 days. The maximum fine for non-payment can be up to £20,000 per employee and employers who fail to pay, face a possible 15-year ban from being a company director.

The latest National Minimum Wage and National Living Wage rates came into effect on 1 April 2017. The NLW is currently:

• £7.50 for those aged 25 and over
• £7.05 for 21-24 year olds
• £5.60 for 18-20 year olds
• and the rate for workers above the school leaving age but under 18 is £4.05.

The NMW rate for apprentices is £3.50 per hour.

It is important to remember that certain payments made by workers must not be included when the minimum wage is calculated such as items bought for work that are not refunded.

HMRC investigates all complaints of employers failing to pay the correct minimum wage. Last year, HMRC’s enforcement budget was increased with more officers investigating NMW complaints. HMRC carries out spot checks and can also launch an investigation if they receive a complaint from an employee.

Planning note: We offer employers a minimum wage audit to ensure that you are following the correct guidelines. Penalties are significant, so if you have doubts that you are meeting your obligations, please call to discuss your options.