Living Wage Increase & Enforcement Announced

A range of measures to ensure that businesses comply with their wage obligations have been announced today by the government.

The national minimum wage is due to increase form £6.50 to £6.70 for people 21 and over from 1 October 2015. The introduction of the mandatory national living wage for people 25 and above, initially set at £7.20, follows in April 2016.

The measures announced include:

  1. Doubling penalties for non-payment and non compliance
  2. A new team to handle criminal prosecutions will be set up at HMRC
  3. Increasing the budget for enforcement
  4. Ensuring that those found guilty will be considered for disqualification from being a company director for 15 years.

The penalties for companies failing to pay at least the minimum wage will now be 200% of arrears, halved if the company pays the penalty within 14 days.

The maximum penalty for individual workers will remain at £20,000.

The new HMRC team of compliance officers will have a number of powers at their disposal including penalties, and naming and shaming.

John Allan, national chairman for the Federation of Small Businesses, said:

As well as focusing on enforcement, the government must clearly and proactively communicate the charge to employers - ensuring businesses fully understand what they need to do and when.

Talk to one of our accountants today to learn more about how this might affect your wage obligations.