Keeping on the right side of the law as a business owner when it comes to your staff can be confusing at times. McDade Roberts have a dedicated payroll team that many businesses outsource their payroll headaches to. Below our payroll team explain a question some employers may not be aware of in terms of National Minimum Wage and National Living Wage employee rights.
What rights do employees have regarding National Minimal Wage?
Individuals have the right to apply to a court or tribunal for non-payment of the NMW. They are also protected from suffering any loss for such proceedings. Confidential help and advice on the NMW is available from the Pay and Work Rights Helpline: 0300 123 1100. Callers can be assisted in over 100 different languages. These lines take complaints from workers, employers and third parties.
Criminal Offences
There are six criminal offences relating to the NMW:
- refusal or wilful neglect to pay the NMW
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- failing to keep or preserve NMW records
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- causing or allowing a false entry to be made in NMW records
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- producing or furnishing false records or information
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- intentionally delaying or obstructing a compliance officer
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- refusing or neglecting to answer questions, give information or produce documents to a compliance officer
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The fine on conviction for each offence is up to £20,000 where tried in the magistrates' court (or the Scottish equivalent). The most serious criminal cases are triable in the Crown Court (or Scottish equivalent). This means that employers who deliberately fail to pay the NMW may face a potentially unlimited fine.
Enforcement
The main means of enforcing the NMW are through:
- compliance officers of HM Revenue & Customs (HMRC)
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- agricultural wages inspectors for the NMW in the agricultural sector (and the agricultural minimum wage)
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- claims by workers before tribunals and courts
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HMRC compliance officers will act in response to complaints that an employer is not paying the NMW - whether the complaint is by workers or others. They will also investigate where there may be a risk of non-payment. Since 6 April 2009, HMRC has been able to use the search and seize powers in the Police and Criminal Evidence Act 1984 when investigating criminal offences under the National Minimum Wage Act 1998. Officers may carry out inspections of employers at any time. There is no requirement to provide reasons for an inspection. They must show an identity document on request and have considerable powers to obtain information.
Notice of underpayment
If a compliance officer believes that an employer has failed to pay at least the NMW to a worker, the officer may serve a notice of underpayment, requiring the employer to:
- repay arrears of the NMW to each worker named on the notice
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- pay a penalty to the Secretary of State totalling 200% of the total underpayment for all the workers shown on the notice as underpaid for pay reference periods starting on or after 6 April 2009, with a minimum penalty of £100 and a maximum penalty of £20,000 per worker
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- The penalty will be reduced by 50% if the employer fully complies with all the terms of the notice of underpayment within 14 days of service of the notice
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The employer may appeal against the notice of underpayment within 28 days of service of the notice. An appeal must be made to the employment tribunal (or industrial tribunal in Northern Ireland). If the employer does not comply with the notice of underpayment, HMRC can take a case to a tribunal or County Court (or Scottish equivalent) on behalf of the worker, or prosecute the employer.
Employers who deliberately pay their staff less than the NMW may have their breaches publicised by the Department for Business, Energy and Industrial Strategy.
HMRC has created a Dynamic Response Team which will concentrate on the most complex and high profile cases.
Worried you are doing the right thing? Outsource your payroll headaches to McDade Roberts.
As McDade Roberts have our own payroll team, we keep our clients up to date with the latest changes so they don’t have to gather the information from elsewhere.
If you have a payroll or National Insurance question we can help you with, feel free to give the payroll team a call on 01772 786 858 or email office@mcdaderoberts.co.uk. Your first consultation is always free so you have nothing to lose.