UK200Group comment on penalties regarding National Minimum Wage and the new National Living Wage
Members of the UK200Group of independent chartered accountancy and law firms have commented on news that the Government aims to get tougher on employers who fail to pay the National Minimum Wage and the new National Living Wage.
Under new plans outlined by the Government, employers could see penalties for failing to pay the correct wage double, from 100% of arrears owed to 200%, and has also suggested that the worst employers could face being disqualified from being a company director for up to 15 years.
Jonathan Russell, Partner at UK200Group member firm ReesRussell:
“Whilst some employers might deliberately disregard the law, as regards the National Minimum Wage (NMW) and the soon to be National Living Wage (NLW), it is often small businesses who are struggling with the ever increasing burden of Government red tape that inadvertently fall foul. Whilst fully supporting the concept of better pay, frequently it is the complexity of the calculations and lack of clear guidance and rules that causes problems.
“The rules over pay calculation are overly complex, especially when you have commission payments and complex holiday calculations. Many businesses will simply not be able to afford the NLW, especially those delivering outsourced services to Government, who have constantly seen payments driven down. Businesses have now got to contend with the NMW, the NLW, complex holiday pay calculations and auto-enrolment, whilst still trying to operate in a very competitive environment.
“Perhaps the Government should have penalties for not delivering on its own promises and possibly make compliance simpler, rather than having yet more and larger penalties for those who get it wrong.”
Duncan Montgomery, tax partner at UK200Group member firm Whittingham Riddell LLP:
“The rise in National Living wage, coupled with penalties will disproportionately affect businesses with a labour intensive model, however for most businesses the rise will not be a major issue in their employment thinking.
“Getting the most from all your people is a much bigger issue, and using the best management techniques, coupled with ensuring systems transfer information cleanly to management and business owners is an area that can yield much more productive gains than any form of change in minimum wage could destroy.”