National living wage: tougher penalties come into force

Employers who fail to pay the national living wage now face increased fines

A new unit at HM Revenue & Customs (HMRC) is to be funded in order to crack down on firms who are not in compliance with the law. Any employer found guilty of non-compliance will be considered for disqualification as a company director for 15 years. Mr Cameron said the new measures were intended to send a message to “unscrupulous employers” that they would pay the price if they underpaid their staff. The national living wage (which only applies to workers over the age of 25) will start at £7.20 an hour from next April, rising to at least £9 an hour by 2020. Until now, employers had to pay the amount they had underpaid workers, plus a penalty calculated at 100% of the underpayment up to a maximum of £20,000. The Prime Minister said the penalty would go up from 100% of underpayment to 200%. The measures also include doubling penalties for non-payment, and will be introduced alongside the government’s national living wage. The Prime Minister was recently quoted in The Times as saying

“the national living wage will only work if it is properly enforced. Businesses are responsible for making that happen”.

Not everyone, however, sees the national living wage as a good thing. A former Sainsbury’s chief executive has claimed that it will “destroy jobs”, arguing that employers will seek to make their workforces more productive and that it will therefore lead to fewer jobs. If you a business owner, then these new measures may affect you. Please get in touch with us if you need advice. T: 020 7376 9333 E:

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