Earlier this month the Government’s Department for Business named another 197 employers who have not paid their workers the National Minimum Wage making a total of 687 since the scheme to publicly name and shame employers was introduced in October 2013. These employers between them owed their employees £3.5 million.
The Government doesn’t distinguish between large or smaller employers or how much the employees have been underpaid. In this most recent list one company owed just £103.48 to one employee whilst the biggest underpayment was almost £100,000 to 30 employees. This shows that the Government will find and fine all those employers who do not pay the minimum wage whatever industry they are in. This latest list showed a number of child care nurseries, recruitment agencies, care homes, hairdressers and hotels to have been identified as paying their staff below the minimum wage.
So how do they find out who is being paid below the minimum wage? Employees themselves probably highlight this which will spark an investigation, just as they will question why they don’t get a payslip or a P60 from their employer showing how much they have earned. There is even a Minimum Wage Calculator on the HMRC website where employees can check whether they are being paid correctly.
Business owners may think they do not have employees – they just employ people as and when they need them or perhaps pay them cash in hand. But there are rules around employing people and who is an employee and who can be considered self-employed. You can find out more about the differences between employed and self-employed workers here.
If you do have a payroll you are required to submit your payroll information to HMRC at every payroll processing – daily, weekly or monthly. Your employees’ record will show the range of hours they work and what they are paid so it would be quite simple for HMRC to identify possible low paid workers.
Penalties for not paying the minimum wage are not insignificant. 200% of the amount underpaid is the penalty from 1st April 2016 with a minimum penalty of £100 and a maximum of £20,000. This penalty can be halved if the underpayments are repaid and the penalty paid within 14 days.
All business owners should be aware of the penalties for not paying their staff the National Minimum Wage and the National Living Wage for staff aged 25 and over. And in addition should consider the penalties which can also be applied for not providing your employees with a workplace pension from your Staging Date. The penalties will start with a £400 fine followed by a £50 per day (1-4 employees) or £500 per day (5 to 49 employees) for each day you are non compliant. You will be considered non compliant from your Staging Date unless you have requested postponement prior to your Staging Date.
Its tough for employers to deal with all this legislation. Most employers want to get it right but can feel swamped by all the things they have to do to keep their business going. Payroll and auto enrolment are two areas which employers should definitely consider outsourcing. Experienced payroll providers will ensure you are meeting your employer obligations and staying the right side of the legislation. Many payroll providers will also ensure you meet your auto enrolment deadline and because payroll and auto enrolment go together it makes sense to find one provider who can do both.
So if you want to avoid being one of the employers “named and shamed” by HMRC or if you want to avoid the hefty penalties associated with The Pension Regulator contact us. We provide payroll and auto enrolment services for lots of small business owners like you who need some help and we will take away the pain of complying. You will wish you had found us sooner! Give us a call on 01722 341820.
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