UK businesses braced for further compulsory pay rises

Business owners across the UK are bracing themselves for a second compulsory pay rise for younger workers in six months from 1st April, while new powers to fine, name and ban non-compliant company directors will also be implemented.

From 1st April, workers aged 25 and over will be required to be paid £7.50 an hour – an increase of 30p an hour. Young staff aged 21-24 will also need to paid hourly rates of £7.05 – an increase of 10p an hour.

The Government is also increasing wages for teens and apprentices with pay rises for 18-20-year-olds, under 18-year-olds and apprentices to £5.60, £4.05 and £3.50 respectively.

In the last 12 months, the Government has been able to impose penalties to business owners of up to 200% of the wages owed, up to a maximum of £20,000 per employee, with a minimum payment of £100 per employee, for failing to implement statutory pay increases.

According to the National Audit Office (NAO), 2015-16 saw an increasing number of employers failing to adhere to the National Minimum Wage. Some 58,000 workers are claimed to be owed money by their employers; more than twice as many as in 2014-15 (28,000).

Since February 2013, the Government issued a ‘name and shame’ list of employers that have failed to pay the minimum wage to their staff; amounting to £3.5m in owed wages.

Those offending businesses have been fined a collective total of £1.4m, yet none of the companies have so far faced criminal charges.

Within the latest employer bulletin issued by HM Revenue & Customs (HMRC) it recommended employers to undergo a regular check of each employee’s wage rate to avoid the threat of underpaying staff.

Underpayment can occur when employers fail to acknowledge annual rate increases, miss key birthdays of their staff – which see them move from one age band to another – or fail to correctly apply apprenticeship wages.

Date published 16 Jan 2017 | Last updated 16 Jan 2017