HMRC to enforce minimum wage compliance with £5.3m funding

George Hay Chartered Accountants

According to the Government’s latest Labour Market Enforcement Strategy report HM Revenue & Customs (HMRC) will 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 an 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 NMW/NLW in April 2016, which equates to around 1.3 per cent of all UK employee jobs.

Within its findings, the Government identified accommodation and food services, the wholesale and retail trade and other service providers such as hairdressers and beauty salons as some of the worst offenders.

Shockingly, of those employees who were underpaid, more than 40 per cent received wages that were at least 50p an hour less than the NLW.

It is thought that this high rate of underpayment contributed to the increase in penalties on arrears from 100 per cent to 200 per cent in April 2016.

Currently HMRC’s enforcement action, in respect of non-compliance with the statutory wage legislation, consists of the following:

  • getting the wage arrears paid to the worker;
  • civil penalties of up to 200 per cent of the arrears owed per worker up to £20,000;
  • naming scheme under which the Department for Business, Energy and Industrial Strategy 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 your business is compliant with the current NMW and NLW requirements.

Elaine Shaw, Payroll Manager at George Hay, commented: “It is important that businesses understand the severity of underpaying their employees and take note of the serious consequences.”

“We understand that it is not always easy for businesses to meet the new wage requirements, with many cutting staff hours, scaling back investment plans, or taking less profits in order to remain compliant. No matter how challenging it may be though, businesses simply cannot afford to ignore their legal obligation to pay workers the NMW or NLW. If you’re concerned about fulfilling these requirements, then you should seek advice at the earliest opportunity.”

Here at George Hay, we offer a dedicated outsourced payroll service to all industry sectors, tailored to the requirements of each individual business. Our professionals have the specialist knowledge and experience to help you with any payroll query you may have, so why not contact one of our team today on 01767 315010.

Source: Labour Market Enforcement Strategy

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