The new National Minimum Wage (NMW) rates apply from today (1 October 2009).
For workers aged 22 and over, the rate has increased from £5.73 to £5.80 an hour. The rate for 18 to 21-year-olds has risen from £4.77 to £4.83 and for 16 and 17-year-olds the rate has increased from £3.53 an hour to £3.57.
The accommodation offset has risen from £4.46 per day to £4.51 from 1 October 2009.
In addition to the rate changes, the Government has accepted the recommendation of the Low Pay Commission (LPC) that the adult rate of the NMW should be extended to 21-year-olds. This will be implemented from October 2010.
The LPC has also recommended that information on employers who have shown a wilful disregard for NMW legislation should be publicly available. The Government has committed itself to developing proposals to achieve this, taking into account the practical issues involved.
The Government will also consider the LPC’s proposal that a minimum wage be introduced for apprentices and will respond in full to this when it sets the LPC’s remit for 2010.
The former Department for Business, Enterprise and Regulatory Reform (now the Department for Business, Innovation and Skills) has already announced that the NMW Regulations are to be changed so that tips and service charges can no longer be used to make up staff salaries to the minimum legal level.
Enforcement of the National Minimum Wage – The New Regime
From 6 April 2009, changes have been made to the way the National Minimum Wage (NMW) is enforced. In addition, where HM Revenue and Customs (HMRC) discover that a worker has been paid less than the NMW, he or she is entitled to have arrears of wages repaid at current rates. These changes were brought in by the Employment Act 2008. The Act also gives HMRC compliance officers new inspection powers and strengthens the criminal regime for NMW offences.
If HMRC find that there has been an underpayment of the NMW, they may issue a notice of underpayment requiring the employer to repay the arrears and to pay a financial penalty to the Secretary of State. Employers can appeal to the Employment Tribunal against the notice of underpayment.
A penalty set at 50 per cent of the total underpayment will be charged in respect of underpayments of the NMW occurring in pay reference periods starting on or after 6 April 2009. However, there is a minimum penalty of £100 and a maximum penalty of £5,000. Employers who comply fully with the notice of underpayment within 14 days of service will receive a discount of 50 per cent on the penalty.
Where workers are owed arrears, the repayment must take account of the length of time that has elapsed since the underpayment. Where the rate of the NMW at the time the arrears are calculated is higher than the NMW in force at the time the underpayment occurred, the arrears will be calculated by reference to the current rate.
Compliance officers have the power to remove NMW records from an employer’s premises for photocopying. The compliance officer will be entitled to remove complete records but must return them within a reasonable period.
The Employment Act 2008 also gives HMRC the power to use the search and seize powers in the Police and Criminal Evidence Act 1984 when investigating criminal offences under the National Minimum Wage Act 1998 and makes changes to the way that criminal offences are investigated and enforced. With effect from 6 April 2009, the most serious cases can be brought to trial in the Crown Court. This means that employers who deliberately fail to pay the NMW may face harsher penalties.