Are you complying with the National Minimum Wage?

From 6 April 2009 automatic penalties have been introduced for those who do not comply with the National Minimum Wage.

The law on how the National Minimum Wage is enforced changed in April. Employers who fail to pay the minimum wage, will now face an automatic financial penalty with the most serious cases facing an unlimited fine.

These changes help to prevent employers from being undercut by dishonest competitors. From 6 April 2009, new laws mean that employers who fail to pay the minimum wage will face an automatic penalty of between £100 and £5,000 based on the amount they owe to their workers.

If you are amongst the minority who don’t pay the minimum wage, you will have to pay this penalty even if the underpayment was a mistake. In the most serious cases employers could also face an unlimited fine.

Workers who have been underpaid will also be entitled to have arrears of the minimum wage repaid based on the current rate. This means that workers will be entitled to arrears based on the current rate even where the underpayment occurred in the past. HMRC can pursue arrears claims for workers going back up to six years.

What is the current National Minimum Wage?

The National Minimum Wage is reviewed every year and current rates (since 1 October 2008) are:

• £5.73 an hour for adults aged 22 and over
• £4.77 an hour for 18-21 year olds
• £3.53 an hour for 16-17 year olds above school leaving age

For information and advice about the National Minimum Wage, including who is eligible, rates and help with calculating potential arrears please visit the Business Link website (opens new window) or call the National Minimum Wage Helpline on 0845 6000 678.