Government announces crackdown on minimum wage non-payments » SMEInsider

Government announces crackdown on minimum wage non-payments

Businesses that fail to pay their employees a minimum wage of £7.20 by next April could face fines of up to £20,000, warns David Cameron.

In Chancellor George Osborne’s summer budget, the Conservatives announced that the government would receive a ‘pay rise’, with the national minimum wage being increased from £6.50 to £7.20 to those aged over 25.

The wage increase will kick in from April 2015, so Cameron has taken the opportunity to warn employers from breaking the rules.

Pay the price

Writing in The Times, Cameron vows to double the penalties that are enforced to employers who fail to pay minimum wage.

‘‘The National Living Wage will be introduced in April, giving low-paid workers a £20 a week pay rise,’’ wrote Cameron.

The Prime Minister also used his article to talk about his plans for the future, with his government planning to raise the minimum wage to £9 per hour by 2020. This falls in line with his plans to create 3 million apprenticeships by the end of the decade.

‘‘Combine that with an increase in the Personal Allowance to £12,500, and you can see the power of the modern Conservative Party’s One Nation message. We back work. We promote well-paid work. We want you to keep more of your own money. That’s why we can say: we are the true party of working people in Britain today.’’

Government crackdown

Cameron also plans to collaborate with HMRC when enforcing penalties. As well as announcing plans to double the enforcement budget for non-payments, the government has created a new division within the ministerial department, making it easier for the government to pursue criminal prosecution against employers.

‘‘We will significantly increase the enforcement budget, set up a new team in HMRC to take forward criminal prosecutions for those who deliberately don’t comply, and, from this autumn, ensure that anyone found guilty will be considered for disqualification from being a company director for 15 years,’’ continued Cameron.

‘‘All that will be all overseen by a new Labour Market Enforcement Director. So to unscrupulous employers who think they can get labour on the cheap, the message is clear: underpay your staff, and you will pay the price.’’

The decision has been welcomed by government figures, with many now focusing their efforts on reducing the UK’s non-payment rate.

‘‘Most employers make a mistake and our priority is to make sure arrears are paid. Prosecutions will probably go up but they will remain a rare tool,’’ explained Nick Boles, the government’s skills minister.

The wage increase will ‘destroy’ jobs

Major figures within the retail sector have hit out against government plans to increase the national minimum wage. Justin King, former CEO of Sainsbury’s, has come out against the plans, stating that they pose a huge threat to national productivity.

‘‘You can’t talk about productivity without recognising that one of the consequences of productivity is less people producing the same output,’’ explained King.

‘‘Companies will invest in more productivity and as a consequence there will be less jobs.’’

  • Reg Varney

    Companies like KFC McShit B&Q etc will just reduce the hours of their staff

  • Peter Symonds

    I think that you will find that the current minimum wage for a 25+ year old is £6.50 per hour not the £7.50 you are claiming in this article, this will rise to £6.70 per hour in October 2015. You appear to be confusing the NMW with the National Living Wage which is set to be £7.20 per hour in April 2016 for 25 year olds and upwards.

  • Hi Peter, thank you for your comment. I did in fact say that the wage for 25+ is £6.50 an hour. ”the national minimum wage being increased from £6.50 to £7.50 to those aged over 25.”

    Apologies for the NMW mistake, it has been changed.