HMRC penalties for employers who fail to pay NMW

In March 2014, the NMW penalty rates for employers increased. The financial penalty, calculated as a percentage of the total underpayment notice served on the employer by an NMW enforcement officer, went up from 50% to 100%. The maximum penalty increased from £5,000 to £20,000 (National Minimum Wage (Variation of Financial Penalty) Regulations 2014).

A further increase is planned under the Small Business, Enterprise and Regulatory Reform Act 2015, to make the £20,000 penalty payable on a “per worker underpaid” basis, as opposed to “per underpayment notice”. This change to the law has not yet been implemented.

On 1 October 2013, the government launched a revised naming and shaming policy for employers. To be named under the old rules, an employer had to owe at least £2,000 of NMW arrears in total, with an average sum owed to each worker of at least £500. Under the new policy, these restrictions have been lifted.

The TUC has published a report on NMW enforcement, Keeping up the pressure — what more needs to be done, available from its website (https://www.tuc.org.uk/sites/default/files/ImprovingNationalMinimumWag%20Enforcement.pdf).

The report sets out a ten-point strategy to improve NMW enforcement.