Companies in Danger of being Fined over Minimum Wage

2 min read MSPs
Around 80 per cent of the IT and telecommunications sector did not know the fines they faced for not paying eligible employees at least the National Minimum Wage (NMW) according to the Department for Business.

The Department for Business, Innovation and Skills carried out the nationwide survey of 1,000 employers, which also found that in the IT and telecommunications sector:

•40 per cent employ people on the NMW

•12 per cent didn’t know what the hourly NMW rate would be from 1 October

•49 per cent didn’t know it was an offence not to pay NMW or falsify pay records

•58 per cent didn’t know they must repay workers they have underpaid

•65 per cent didn’t know companies could be named and shamed for not paying

The penalty for not paying your employees at least the NMW that they are entitled to includes a fine of up to £20,000 per worker for underpaying and your business could be publically named.

The revelation provides the sector with a timely reminder to ensure it is paying its employees at least the NMW ahead of the rate increasing on Thursday 1 October, from £6.50 to £6.70 for 21-year-olds and over. This three per cent increase in the adult rate represents the biggest real increase in the NMW since 2006 and moves the wage closer to the average living wage than ever before.

The new rate will mean that a full time employee, working 35 hours, will see an additional £364 in their annual pay packets, the largest cash increase since 2008. The new apprenticeship rate, the largest increase at 21 per cent, will see apprentices receive £1,037 more pay.

Employers have said they are overwhelmingly in favour of the NMW, with 88 per cent, across all sectors, thinking it was a good idea. Although the survey showed some discrepancies about who they thought were eligible:

•30 per cent didn’t think full time employees were eligible

•30 per cent didn’t think part time employees were eligible

•37 per cent didn’t think agency employees were eligible

•52 per cent didn’t think trainees or those on probation were eligible

IT and telecommunications employers have also seen other benefits from paying their employees the NMW, with 78 per cent reporting an increase in production, loyalty and morale and frequent returning customers (76 per cent).

Nearly 1.5 million workers in the UK are estimated to being paid at or below the NMW of £6.70, according to a separate ONS Annual Survey of Hours and Earnings from 2014.

With the vast majority of employees are now eligible for the National Minimum Wage (NMW), including apprentices it is vital that businesses are aware of today’s rate changes and their responsibilities to their employees who will be entitled to an increase in their pay packets.

If you are not paying at least the NMW you are breaking the law.

If you are concerned about your current pay arrangement or want to check wage queries you can contact ACAS on 0300 123 1100 for free and impartial advice as well as support in correcting any issues.