The consequence of a failure to pay the National Minimum Wage rate is the employer will have to pay back the employee and they risk being ordered to pay damages by the Employment Tribunal. The employer could also face a fine by HMRC of 200% of the arrears capped currently at £20,000 per employee. HMRC will also name and shame employers. Reviewing wages payments and deductions can avoid this happening.
What are the consequences of not paying the National Minimum Wage or National Living Wage?
Employers should be mindful of under paying employees the National Minimum Wage or the National Living Wage. This the minimum wage you must pay to your employees for the work they have undertaken.
From the 1 April 2023 every year the following rates apply
23 and over £10.42
21 to 22 £10.18
18 to 20 £7.49
Under 18/Apprentice £5.28
The apprenticeship rate will apply if the person is aged 19 and under or age 19 and over but in the first year of the apprenticeship. An apprentice aged 21 and who has completed the first year of their apprenticeship will be entitled to £10.18 per hour. These rates will apply to all employees regardless of their status as a full time or a part time employee. There are a few exemptions such as self-employed directors and those undertaking genuine work experience.
Employers must adopt a practice of annually reviewing their employees wage payments to ensure they comply with the latest increases of the National Minimum Wage and Living Wage. Unfortunately, some companies have poor HR practices, and this has resulted in unnecessary Employment Tribunal claims and being named and shamed in public by HMRC.
Employers should be mindful of circumstance that will result in an employee’s wage falling below the National Minimum Wage and Living Wage. Employers should carefully assess the impact of all deductions made from wages. Employers can also fall foul by failing to pay overtime and failing to correctly pay apprentices the National Minimum Wage rate. Employers should strive to keep accurate records of all deductions and wage payments. These simple failures can have a negative impact on the employer’s relationship with the employee and their public reputation.
The consequence of a failure to pay the National Minimum Wage rate is the employer will have to pay back the employee wages and they risk being ordered to pay damages by the Employment Tribunal. The employer will also face a fine by HMRC of 200% of the arrears capped currently at £20,000 per employee.
Should you require advice the National Minimum Wage and the Living Wage call the Quest advice line on 0116 274 9193. Remember good HR practices avoids negative situations!
