UK Government to introduce tough fines for companies that fail to pay national living wage

British Prime Minister David Cameron has said that the government will fine unscrupulous employers who do not pay their staff the national living wage, it was reported on Tuesday.

The government’s crackdown on national living wage non-compliance includes funding for a new HM Revenue & Customs (HMRC) unit that will enforce the pay policy. Cameron was quoted as saying that the new pay policy would only work if it were “properly enforced” and added: “Businesses are responsible for making that happen, and today I’m announcing how we will make sure they do.”

According to reports, fines for non-payment will double, which means employers could be liable for a penalty of 200% of unpaid wages, up to a maximum of GBP20,000. In addition, company bosses who fail to pay the fine will face disqualification as company directors for up to 15 years.

Previously, employers were required to pay the amount they had underpaid workers, plus a penalty calculated at 50% of the underpayment, up to a maximum of GBP5,000. The penalty was increased under the coalition government.

It was also reported that in the past, relatively few firms have been fined for not paying the minimum wage. However the Department for Business announced in February that a crackdown launched in October 2013 had led to 162 firms being fined for non-compliance, as well as being named and shamed.

Currently, the minimum wage for those aged 21 and over is GBP6.50 per hour. This will increase to GBP6.70 in October. The Chancellor of the Exchequer has also announced that from April 2016, employers will have to pay a national living wage of at least GBP7.20 to employees aged over 25. The so called national living wage is expected to rise to GBP9.0 per hour by the end of the decade.