Businesses must ensure they pay the minimum wage

The Government has announced that it will resume ‘naming and shaming’ employers that fail to pay the national minimum wage (NMW), as part of an overhaul aimed at reducing the burden of the legislation on businesses.

The reformed regulations will reintroduce regular naming rounds, designed as a deterrent for underpayers. However, they will also offer an increased level of support for employers around compliance and changes to the regime will mean that technical or inadvertent violations will be less harshly punished.

The policy of naming and shaming employers in breach of NMW regulations was quietly suspended towards the end of 2018, following several high-profile complaints from businesses that inadvertently fell foul of the complex rules.

The rules will be changed from April to give employers more leeway. For example, they will not be penalised if salary sacrifice schemes push employees’ per-hour pay below the NMW.

The Government has also increased the threshold for naming employers to those owing more than £500 in arrears, up from £100. Businesses that underpay by less than £100 will have the chance to correct their mistakes without being named but will still have to reimburse workers and could face fines of up to 200 per cent of arrears.

Business minister Kelly Tolhurst said the changes were to make it “as easy as possible” for employers to comply with the NMW and placed a focus on small and medium-sized enterprises (SMEs) that “want to get it right”.

However, critics claim that there needs to be a greater focus on helping small firms, in particular, to comply, with one saying that HM Revenue & Customs (HMRC) could have chosen to increase flexibility over the penalties levied on employers based on, for example, the underlying reasons for the underpayment.

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