National Living Wage

Did you know that the Government have introduced a National Living Wage?

Well, they have and it comes into effect from 1st April 2016.  From this date, all employers will have to pay workers aged 25 and over £7.20 per hour.  The rate is set to increase to £9.00 by 2020.

So what happens if you choose not to pay, what are the consequences?

The Compliance Officer from HMRC may issue a notice of underpayment requiring the employer to pay the arrears to the worker(s) and pay a financial penalty to the Secretary of State.

The penalty is set at 100% of the total underpayment. This will increase to 200% for pay reference periods starting on or after 1 April 2016. There is a minimum payment of £100 and a maximum payment of £20,000. The maximum payment applies for each worker who has been underpaid, not to the total payment for all workers.

The most serious cases of non-compliance with the national minimum wage legislation, for example producing false records or refusing to answer questions from a compliance officer, may be criminally prosecuted by the Revenue and Customs Prosecutions Office. The potential penalty on conviction is an unlimited fine.

Our advice is to review your workforce now and ensure that you identify those individuals below the National Living Wage and ensure that from the 1st April 2016, they are paid at the correct rate.