After George Osborne’s announcement in the recent Summer Budget surrounding National Living Wage, the Government have taken further steps to ensure that employers pay National Minimum Wage and the National Living Wage to all workers, with plans to introduce hardened penalties for those who don’t.
These tougher actions include, doubling the penalties issued for non-payments and disqualifying employers from being company directors for up to 15 years.
With the National Living Wage of £7.20 for workers over the age of 25, coming into effect from April 2016 and National Minimum Wage rising to £6.70 in October this year, stronger penalties will be introduced to non-payments ensuring all workers receive the minimum required hourly rate.
In a recent article in the Times newspaper Prime Minister, David Cameron stated “The National Living Wage will only work if it is properly enforced … Businesses are responsible for making that happen.”
A new department is due to be set up by HMRC to tackle these employers that deliberately avoid paying the required rate to their workers, whilst pursuing criminal prosecution of such employers. Non-payments will increase from 100% of arrears owed to 200%, with a maximum penalty of £20,000 per worker remaining.
These policies will ensure that individuals are paid what they are owed as a worker, with the penalties working as an aid in ensuring this. HMRC understand that employers do sometimes make unintentional mistakes, therefore if the penalty payment is made within 14 days then the amount owed is halved.
We have seen mixed reactions surrounding the introduction of the National Living Wage, with fears that employers will make their current workforce more productive, leading to fewer job opportunities for workers. However this has been argued by others that increase in living wages, will increase the public spending and in turn increase the job market.