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New Penalties for the National Minimum Wage

The Government has published new legislation regarding the forthcoming amendments to the National Minimum Wage.

There will be tougher penalties in place for employers who fail to pay the National Minimum Wage. These include doubling the penalty for non-payment and disqualifying guilty employers from holding a directorship for up to 15 years.

The legislation will come into effect next year alongside the new National Minimum Wage rates.

The National Minimum Wage is set at different rates depending upon the age of the employee.

From 1st April 2016 the National Minimum Wage rates will be:
  • £3.30 for an apprentice
  • £3.87 for employees aged under 18
  • £5.30 for employees aged 18-21
  • £6.70 for employees aged 21-25
  • £7.20 for employees aged over 25

The Government has re-branded the National Minimum Wage for over 25s as the National Living Wage. However this is not to be confused with the voluntary living wage rate, as calculated and set by the Living Wage Foundation.

The new legislation also outlines the revised punishments for non-payment of the minimum wage. Failure to pay the minimum rate will increase from 100% of the arrears to 200% (although this halves again if paid within 14 days).

In addition to this a new HMRC team will bring criminal prosecutions against unrepentant employers.

The maximum penalty will remain at £20,000 per worker.

Why the government has chosen the term ‘National Living Wage’ is not known. Given that this new banding of the National Minimum Wage does not reflect the Living Wage Foundation figures it does appear unnecessarily confusing.

Whatever the name of the legislation though, these new penalties show just how seriously HMRC plans to take the issue of fair pay.


Does your payroll stress you out every month? HR Solutions can help. Call us on 0844 324 5840 or contact us online to find out more.

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