Measures to ensure fair pay announced

Posted on 1 Sep 2015 by Victoria Fitzgerald

A package of measures to ensure individuals receive the pay they are entitled to is being announced today.

The measures include doubling the penalties for non-payment of the National Minimum Wage and the new National Living Wage, as well as, increasing the enforcement budget.

In addition, a new team in HMRC will be set up to take forward criminal prosecutions for those who deliberately do not comply and to ensure anyone found guilty will be considered for disqualification from being a company director for up to 15 years.

Sajid Javid, Secretary for Business, Innovation and Skills.
Sajid Javid, Secretary for Business, Innovation and Skills.

Business Secretary Sajid Javid commented: “There is no excuse for employers flouting minimum wage rules and these announcements will ensure those who do try and cheat staff out of pay will feel the full force of the law.

“This one nation government is committed to making work pay and making sure hardworking people get the salary they are entitled to.”

A new team of compliance officers in HMRC will investigate the most serious cases of employers not paying the National Minimum Wage and National Living Wage when it is introduced in April 2016.

Measures at a glance:

  • Increased penalties for non-payment of minimum wage and new national living wage
  • Dedicated team to tackle most serious cases
  • Increased budget for enforcement
  • New labour market enforcement director

The team will have the power to use all available sanctions, including penalties, prosecutions and naming and shaming the most exploitative employers.

The enforcement budget for the National Minimum Wage and Living Wage will also be increased in 2016/17. Future budgets will be agreed as part of the Spending Review process.

Employers that fail to pay staff at least the minimum wage they are legally entitled to will have to pay double what they do now. This reform is intended to increase compliance and make sure those who break the law face tough consequences.

The calculation of penalties on those who do not comply will rise from 100% of arrears to 200%.

This will be halved if employers pay within 14 days. The overall maximum penalty of £20,000 per worker remains unchanged.

A new Director of Labour Market Enforcement and Exploitation will be created to oversee enforcement of the National Minimum Wage, the Employment Agency Standards Inspectorate and the Gangmasters Licensing Authority (a non-departmental public body of the Home Office).

The director will set priorities for enforcement based on a single view of the intelligence about exploitation and non-compliance.

A consultation will be launched in the Autumn on the introduction of a new offence of aggravated breach of labour market legislation.

The consultation will also propose giving the Gangmasters Licensing Authority additional investigatory powers and a wider remit to tackle serious labour exploitation more effectively.

The Government has also announced today it will improve the guidance and support made available to firms on compliance and will work with payroll providers to be sure payroll software contains checks that staff are being paid what they are entitled to.