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Government resumes naming minimal wage breaches

Businesses that fail to pay their workers the national minimum wage or national living wage will continue to be publicly named by the government, following a review of the scheme.

Government resumes naming minimal wage breaches
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Resumes naming minimal wage breaches

The government has announced the naming scheme will resume calling out businesses failing to meet the requirements, with naming rounds set to occur more often to enhance the effectiveness of the measure as a deterrent.

The government has also increased the threshold for naming employers, meaning that firms that owe arrears of more than £500 in national minimum wage payments to their work forces will now be named. Previously this threshold was £100.

According to the government, this new proportionate approach will mean that some businesses falling foul of the rules by minimum sums will not be named, provided they correct any errors.

These businesses that underpay by less than £100 will have the chance to correct their mistakes without being named, still have to pay back workers and can face fines of up to 200 per cent of the arrears.

“Anyone who is entitled to the minimum wage should receive it – no ifs, no buts – and we’re cracking down on companies that underpay their workers,” said Business Minister Kelly Tolhurst.

“We also want to make it as easy as possible for employers, especially small businesses and those trying to do right by their staff, to comply with the NMW rules, which is why we’re reforming regulations.”

Changes to ‘salaried hours workers’

The government is also changing regulations to widen the range of pay arrangements available to business employing ‘salaried hours workers’, which are workers who receive an annual salary in equal instalments for a set number of contracted hours.

Under these changes, workers who are often paid hourly or per day and consequently have different pay cheques every month, such as those in the retail industry, can be classified as salaried workers.

The changes are tipped to provide more flexibility in how salaried workers are paid, without reducing protections for workers. At the same time, businesses employing these workers are less likely to be caught out by the NMW legislation due to the differences in their hours from one month to the next.

These changes are expected to come into force on 6 April 2020, subject to normal Parliamentary approvals.

“I welcome today’s announcement by the government and believe employers will benefit from the greater clarity these revisions bring to the minimum wage rules for salaried workers,” said Matthew Taylor, director of Labour Market Enforcement.

Additionally, the government has decided that employers offering salary sacrifice and deductions schemes will no longer be subject to financial penalties if the scheme brings payment below the national minimum wage rate, which can be up to 200 per cent of arrears.

Business support

As well as making changes to the rules, the government is doing more to support businesses to comply with national minimum wage, so that they pay their staff correctly first time.

The government has said it will improve NMW guidance available through the GOV.UK website; proactively support new, small businesses through field visits; and provide more support via a helpline for employers who operate deduction or salary sacrifice schemes.

This update to national minimum wage regulations comes ahead of a major overhaul of labour market enforcement, with the creation of a single enforcement body to crack down on employment law breaches, set to be announced as part of the forthcoming employment bill.

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