On 22 March 2014 the government announced it will increase the national minimum wage (NMW) to £6.50 an hour in October 2014. Employers must comply with the increase or risk incurring heftier fines as part of the government’s crackdown on rogue employers that pay workers with wages below the NMW.
In the past, employers that did not comply with the NMW were forced to pay any unpaid wages plus a financial penalty calculated as 50 per cent of the total underpayment for all of their underpaid workers, up to a maximum of £5,000.
Now these employers face a larger maximum penalty, calculated as 100 per cent of the unpaid wages, up to a maximum of £20,000.
The government is pressing the matter further by advocating for the maximum £20,000 penalty to apply to each underpaid worker rather than each employer, setting the stage for potentially enormous fines in the future.
Rogue employers also face public ‘naming and shaming’ for neglecting to properly pay their employees. Based on a scheme that took effect on 1 October 2013, the government has started publishing the names of these employers, which carries with it not just the financial penalties but also the incalculable loss of the public’s trust and a hard-earned reputation.