THE Government continues to fine and name and shame businesses who fail to pay their workers the National Minimum Wage (“NMW”).

Businesses must pay their employees the NMW. The rate per hour is determined by the employee’s age and whether or not they are an apprentice.

The rate currently stands at £6.50 for over 21s (£6.70 from October 1), £5.13 for 18 to 20 year olds, £3.79 for under 18s and £2.73 for apprentices.

The chancellor George Osborne announced in the recent Budget the introduction of a National Living Wage (“NLW”) from April 2016. Payment of the NLW will be compulsory to all workers aged 25 or over, and will be set at £7.20 per hour, outside London. With the NMW for this age group currently set at £6.50 per hour, this represents more than a 10 per cent pay rise for low-paid workers.

Workers aged under 18 or apprentices are least likely to be paid the NMW. Businesses of various sizes admit to not paying their staff correctly, with 23 (4.6%) of 500 employers surveyed underpaying those 18 and under, while 20 (4%) of the 500 are not paying apprentices correctly.

A survey of employers’ attitudes towards paying NMW highlighted that half of employers do so because it is the law, while the other half do so because they think it is fair. Almost 10% of companies admitted to paying NMW because they have to, but don’t like doing it, while 17% say it is the maximum they can afford, although they would like to pay more.

Employers in breach have to pay back historical arrears of wages at the current NMW rates, as well as paying a penalty of up to £20,000 per underpaid worker. Director’s disqualification will be a possible penalty from April 2016.

The majority (73.8%) of employers surveyed were either unaware that there is are penalties or did not know how much the potential penalties could be.

A finding of underpayment by HMRC, who investigate NMW allegations, can also have a significant and damaging impact on an employer’s brand and reputation. The default position is that an underpayment will lead automatically to public naming and shaming.

Experience has taught us that in these situations the sooner an employer takes professional advice the better and for that reason we have set up a National Minimum Wage hotline. Concerned employers can call us 24/7 on 07971 520407 without any obligation. We have a proven track record of assisting businesses under investigation, or in order to ensure compliance with the NMW, to avoid the costly risks of failing to do so.

Jeremy Scott is a director and head of Regulatory and Corporate Defence. He can be contacted on 07971 520407 or jeremy.scott@lf-dt.com