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Increased national minimum wage penalties

The government has announced further changes to the national minimum wage regime. Employers who fail to pay their workers the national minimum wage will face an increased financial penalty of up to 100% of the unpaid wages and a higher maximum penalty of up to £20,000.

The National Minimum Wage (Variation of Financial Penalty) Regulations 2014 introducing these new limits are subject to Parliamentary approval and are expected to come into force in February 2014. The Government also intends to legislate as soon as it is able to so that the maximum £20,000 penalty can apply to each underpaid worker.

Currently, the penalty is calculated as 50% of the total underpayment, subject to a minimum penalty of £100 and a maximum penalty of £5000. The penalty is reduced by 50% if the unpaid wages are paid within 14 days. It is not clear whether the fine will still be reduced if paid within 14 days under the new penalties scheme.

The increase in the penalties for non-payment follows changes made last year to make it easier to ‘name and shame’ employers who fail to pay the national minimum wage. Further details are available in my blog post from September.

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