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Are you complying with the National Minimum Wage rules?

HMRC are reminding employers that since the beginning of the current tax year automatic penalties have been introduced for those who do not comply with the National Minimum Wage (NMW) Regulations.

The penalties range from £100 to £5,000 with 50% prompt payment discounts for employers who settle within 14 days of notification.

The penalty is payable in addition to arrears owed to the workers.

The penalty notice will detail the amounts due to workers (calculated according to the formula shown below) and any penalty due on those arrears. The penalty is calculated as half the total underpayment. The underpayments are uprated to take into account the length of time the arrears have been outstanding.

For each payment period the formula is:

Original underpayment x Current NMW rate = Arrears
   Original NMW rate

In serious cases of non compliance the employer may be tried in a Crown Court and in those cases the fines are unlimited.

The current NMW rates are:

  • £5.73 (£5.80 from October 2009) an hour for adults aged 22 and over
  • £4.77 (£4.83 from October 2009) an hour for 18-21 year olds
  • £3.53 (£3.57 from October 2009) an hour for 16-17 year olds.

Internet link: Employer Bulletin article

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