Do you run a business?
Does the date 1st October 2014 have any special resonance with you? If it doesn’t then Harold Stock & Co Solicitors would like to make you aware that the National Minimum Wage increases on this date, and it is a legal requirement that employers comply with these changes.
The National Minimum Wage rate is a legally-enforced standard that the Government introduced to ensure that employees are paid what they deserve. It was introduced in the UK in 1999, and today over 90 per cent of the world’s countries have some minimum wage laws in place. All sizes of company and almost all types of work are subject to this law, and any business found to be paying under the minimum wage could face severe penalties.
The National Minimum Wage of £6.31 an hour for workers aged 21 or over will increase from 1st October 2014 to £6.50, after the Government accepted the recommendations of the Low Pay Commission. Although the rise might seem minimal, it is in fact the first real-terms cash increase for low paid workers since 2008. It is estimated that 1 million workers will see their pay increase by £355 a year. The important point that employers should note is that there are no exemptions from this ruling: every worker, other than volunteers, company directors and self-employed workers are entitled to receive the minimum wage. Even if your business is small, the same rules will still apply.
What happens if a business fails to pay the minimum wage to its eligible workers?
Well, employers who fail to pay the National Minimum Wage to eligible workers will face penalties, representing up to 100 per cent of the wages in arrears to be paid in penalties in addition to the refund of the same amount to the worker in question. From March 2014, these penalties increased from a maximum of £5,000 to £20,000 per employer: what’s more, the Government is further seeking to increase this penalty to make it applicable per worker. In the most serious cases, employers may also find themselves facing criminal prosecution. The penalties don’t end there either. In October 2013, the Government introduced a new ‘naming and shaming’ policy for employers who breached the regulations. So far only 5 employers may have been ‘outed’, but the threat remains none the less.
The New Minimum Wage Rates
The new hourly rates from 1st October 2014, are:
Aged 21 or over £6.50
Aged 18 – 20 years £5.13
Aged 16 – 17 years (above school leaving age, but under 18) £3.79
Apprentices under 19 or in first year of apprenticeship £2.73
It is important to note that these rates apply to pay reference periods beginning on or after that date. Different rates previously applied to agricultural wages, but since 1st October 2013 both agricultural and horticultural workers have been incorporated into the National Minimum wage rates, subject to the terms of their contracts if before that date.
For more advice on employment law issues, or for further information on Disciplinary and Grievance Issues, Discrimination, Employment Contracts and Handbooks, Directors’ Service Agreements, Compromise Agreements, Restructuring / Redundancy, TUPE or Tribunal Representation, call Harold Stock & Co Solicitors on 01457 835597.