What happens when an employer does not pay the National Minimum Wage?

Many businesses know what the National Minimum Wage is but don’t often know what the implications are when this level of pay is not met. By law, employers must pay a minimum amount for the hours you work. There is the National Living Wage for 23 years and over and the National Minimum Wage for if you are under 23 or an apprentice. Please see below the current minimum wage as of April 2021:

● £8.91 – age 23 or over (National Living Wage)
● £8.36 – age 21 to 22
● £6.56 – age 18 to 20
● £4.62 – age under 18
● £4.30 – apprentice

No matter whether you are working full time or part time, if you are employed as an employee or worker, you must receive the National Minimum Wage or National Living Wage. There are a few types of work not covered such as if you are a director, self-employed or doing work experience. The National Minimum Wage increases yearly so it’s important to check that each year you are gaining an increment to meet this requirement.

It can be hard to tell if you are being paid less than national minimum wage because there are a few ways employers can be in breach of this. A common way is when workers are being paid on or just over National Minimum Wage and then incur deductions for things such as uniform meaning their pay is no longer the National Minimum Wage or National Living Wage. Another problem we often see is when employers fail to pay overtime meaning workers have not been paid for all of the time they have worked. This not only has a negative effect mentally but legally.

If you are an apprentice or employ apprentices, it’s important to pay them the correct rate as this differs to standard National Minimum Wage rates. With the current rate sat at £4.30 per hour, many employers are in breach of paying the correct rate. It’s also important to note that these rates are only a base and can be topped up if the employer would like to.

If an employer fails to pay the minimum wage then they will need to pay back the worker in arrears. In addition to this, employers could be required to pay a penalty enforced by the government of up to 200% of the arrears capped at £20,000 per employee. We would advise all employers and employees to review their pay yearly to ensure they are being paid at least the National Minimum Wage.

If you need any help or advice on employment law, managing employees or the National Minimum Wage – Please don’t hesitate to get in touch.

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