The importance of paying minimum wage

Peninsula Team

January 23 2015

Following recent news stories of companies, including large organisations such as H&M and Welcome Break, breaching the National Minimum Wage Regulations 1999 the spotlight has again been focused on the importance of paying minimum wage.

The National Minimum Wage (NMW) is the minimum amount employers can pay workers dependent on their age and status, for example, the apprentice rate applies to apprentices under 19 or 19 and over but in their first year of apprenticeship. There are certain exceptions to this rule, such as voluntary work, a family member of the employer living in the employer’s home and work placements as part of higher and further education.

The importance of paying minimum wage is, not only that it is a criminal offence for employers to pay below NMW, but also it is a highly sensitive area which is subject to government scrutiny due to the issue of exploitation of employees. The government is keen to crack-down on employers not paying the NMW and they have taken steps to penalise employers. Changes to penalties for employers not paying NMW increased in 2014 meaning that employers will face a financial penalty of 100% of the unpaid wages, subject to a maximum of £20,000, as well as making good the underpayment to the employees. Plans have also been announced to increase this penalty to £20,000 per worker, where underpayments of more than £20,000 apply to each such worker.

As seen in the press, the government initiative of ‘naming and shaming’ firms who fail to pay NMW is working to publicise the importance of paying minimum wage. The government is getting tougher on those employers who don’t and the consequences of being named as an offender may lead to problems in recruiting, retaining and engaging staff.

The current minimum wage rates are:

Age 21 and over: £6.50 per hour

Age 18 – 20: £5.13 per hour

Over compulsory school age but not yet 18: £3.79 per hour

Apprentice rate (apprentices who are under 19; or 19 or over but in the 1st year of apprenticeship): £2.73 per hour.

If you need any clarification on this issue then contact the Peninsula Advice Service on 0844 892 2772.

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