Minimum wage penalty to reach £20,000 under Government crackdown

Companies who fail to pay their employees the national minimum wage will face significantly increased penalties, as part of a Government crackdown, with the value of the maximum fines quadrupling compared to current values.

According to a report by CIPD, the professional body representing the human resources industry, currently, employers who fail to pay their staff the minimum wage must pay the wages that are due to their workers, plus an additional financial penalty to HM Revenue and Customs.

The value of the fine is calculated as 50 per cent of the total underpayment for all workers found to be underpaid, with a maximum penalty of £5,000.

Nevertheless, under the Government's new proposals, the aforementioned fine will increase from m 50 per cent to 100 per cent of the total wages owed, with the maximum fine quadrupling to £20,000.

If approved by parliament, the new rules are expected to come into force this February.

Business secretary Vince Cable said: "Anyone entitled to the national minimum wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law.

"So we are bringing in tougher financial penalties to crackdown on those who do not play by the rules. The message is clear — if you break the law, you will face action."

While some employers purposely fail to pay their employees the minimum wages, in some other cases, various admin-related errors might occur.

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