The Poole office of international accountancy and business advisory firm, Mazars, is urging businesses across Dorset and Hampshire to ensure they are up to speed when it comes to the laws surrounding national minimum wage (NMW).
Linda Broomfield, Tax Manager with Mazars warns: “Contrary to popular belief, NMW does not just apply to people who are paid on an hourly basis. It applies to everyone, including weekly and monthly paid employees.
“ Employers need to take special care in firms where there is a “long hours culture” and workers will typically work longer hours than required by their contract. It does not matter that their ‘official’ hours might only be from 9 to 5 – If the pay they receive for the pay reference period (PRP) when divided by the hours they have worked in that PRP is less than the NMW, then the employer is in breach of the NMW.”
Where it is found that NMW has not been paid, the employer is ordered to pay the employee the arrears, taking into account the time over which the underpayment has occurred. If the earnings are high enough to attract liability under PAYE, the employer must operate PAYE on the arrears and also pay over the tax and NI, along with any employer’s NI Contributions, to HMRC.
Linda Broomfield adds: “The employer will also be charged a penalty and their name and details of their offence will be published (a list of those ‘named and shamed’ is published each month). Currently the penalties imposed are equal to 100% of the arrears (although this is halved if the payment is made within 14 days) but the government has recently announced plans to double penalties for non-payment and potentially disqualify those employers who deliberately default from being a company director for up to 15 years. The maximum penalty will remain at £20,000 per worker.”
HMRC are currently running a NMW campaign, which provides an opportunity for employers to check that they are complying with NMW and, if they are not, they can ensure that any arrears are paid back.