Avoiding a National Minimum Wage HR Disaster

2nd March 2017

In recent news, a number of local companies have been “named and shamed’’ for not paying the national minimum wage. Including big name businesses and small employers, it can be a major blow to a company’s reputation and a veritable HR disaster to make it on to the Government’s public list.

With the next round of minimum wage rates due on the 1st April, we want you to keep you out of the negative spotlight.

What’s Happening?

The Government’s National Minimum Wage is the minimum wage per hour that a worker is entitled. An ongoing issue for businesses and HR professionals, it is set to increase each year until 2020. Right now, employers must be aware that the minimum wage will next increase on April 1st. Minimum wage rates will rise to:

  • £7.50 for the 25 and over age group.
  • £7.05 for 21 to 24 year olds.
  • £5.60 for 18 to 20 year olds
  •  £4.05 for under 18s.
  • £3.50 for apprentices.

What Happens if I Don’t Pay?

We want to stress how important it is to get your payments right. Major repercussions will almost certainly affect your business prospects. From an HR perspective, if you mistakenly underpay employees, you will find it more challenging to retain de-motivated employees and attract new talent. Aside from also turning away potential customers, it is against the law.

Raising financial implications, HMRC can send you a notice of arrears plus a penalty for not paying the correct rate of pay to the worker. Penalty fines can be up to 200% of the underpayments and a maximum of £20,000 per worker!

Staying Up to Date

Keeping clients up to date with all these changes is one of our top priorities. We advise all businesses to assess their pay practices as soon as possible to ensure compliance in April.

One of the biggest mistakes employers make is not keeping up to date on employee’s birthdays. Easily remedied, we suggest altering your payroll systems so that they flag up any employee approaching a birthday. This will help you to plan and see who will be moving between minimum wage bands well in advance.

We also suggest speaking to all employees who are entitled to receive a new NMW to tell them that they will receive it. By communicating effectively, you can avoid any potential misunderstandings.

Mandy Fitzmaurice, Managing Director of Purple HR comments:

“Don’t make the mistake and be caught out paying employees the wrong wages! While most employers are getting it right, we’ve still seen a small number who have failed to meet changing requirements. With the next round of changes due in April, we are available to provide bespoke HR advice to ensure you are prepared. The last thing any company needs is to be named and shamed for underpaying staff members.’’

Unsure of what to do?  Give us a call at Purple HR and we can guide you through what needs to be done for your workforce.

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