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Employers 'unaware' of £20k fine for not paying minimum wage

Nearly 80% of employers were not aware of the fines they faced for not paying eligible employees the national minimum wage (NMW), according to a Censuswide survey.

It is estimated there were nearly 1.5 million workers in the UK aged over 21 being paid at or below the NMW in 2014, according to a separate Office for National Statistics Annual Survey of Hours and Earnings.

The Department for Business, Innovation & Skills (BIS) carried out the nationwide survey of 1,000 employers across all sectors that also found:

  • 30% employ people at the NMW;
  • 74% didn’t know what the hourly NMW rate would be from 1 October;
  • 53% didn’t know it was an offence not to pay NMW or to falsify pay records;
  • 64% didn’t know they must repay workers they have underpaid; and
  • 65% didn’t know companies could be named and shamed for not paying the correct rates.

The penalty for not paying employees at least the NMW includes a fine of up to £20,000 per worker and the possibility of the business being publically named.

BIS said the revelation provided the sector with a timely reminder to ensure it was paying its employees at least the NMW ahead of the rate increase on 1 October, from £6.50 to £6.70 for those at least 21 years of age and over.

Employers have said they are overwhelmingly in favour of the NMW, with 88% across all sectors thinking it was a good idea.

There was, however, discrepancies about who people thought were eligible:

  • 22% didn’t think full-time employees were eligible;
  • 23% didn’t think part-time employees were eligible;
  • 32% didn’t think agency employees were eligible; and
  • 47% didn’t think trainees or those on probation were eligible.

Employers have also seen other benefits from paying their employees the NMW, with 85% reporting an increase in production, loyalty and morale and frequent returning customers (80%).

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