National Minimum Wage penalty to be calculated per worker

01 April 2015

The Small Business, Enterprise and Employment Act 2015 is now an act of law and will amend the current penalty for underpayment of the National Minimum Wage (NMW).

In February 2014 the maximum penalty increased from £5,000 to £20,000. This penalty is currently per notice of underpayment (NOU) regardless of how many workers are covered under the NOU. The government said at the time that they would bring in legislation at the earliest opportunity so that the maximum £20,000 penalty can apply to each underpaid worker.

Part 11 of The Small Business, Enterprise and Employment Act 2015 contains measures that amends section 19A of the NMW Act so that the maximum penalty will be determined by the amount owed to each worker as stated in the NOU and the limit on the penalty will be on the extent to which the amount owed to each individual worker can be taken into account.

Secondary legislation will be introduced to ensure that employers in breach of the NMW regulations will be subject to a fine of up to £20,000 for every underpaid worker.