Enforcement and penalties
HM Revenue & Customs (HMRC) is responsible for enforcing payment of the national minimum wage (NMW).
A worker can request in writing to see their pay records at any time. If you refuse or the worker is not being paid the correct NMW amount they are due, they can take a complaint to a tribunal or court.
The role of HMRC
HMRC carries out enquiries into NMW compliance and has the right to visit employers and remove and copy NMW records to check if the employer is paying the NMW. HMRC is permitted to ask questions of you or your workers, including questions about your records. HMRC will normally contact you in advance of any such visit.
If HMRC believes that an employer has failed to pay the NMW to a worker, they may serve a notice of underpayment. This will require the employer to repay arrears to each named worker and pay a financial penalty to HMRC. Since 6 April 2009 the penalty has been set at 50 per cent of the total underpayment (for periods starting on or after 6 April 2009) with a minimum penalty of £100 and a maximum penalty of £5,000. Employers who comply fully with the notice within 14 days of it being served will receive a 50 per cent discount on the penalty.
There is also a new method of calculating NMW arrears using a formula which takes into account current NMW rates and the length of time since the underpayment occurred. Workers are entitled to have arrears of wages repaid using this formula, for the whole period they have been underpaid, including periods prior to 6 April 2009.
If an employer does not comply with the notice of underpayment, the enforcement officer can take a case to a tribunal or county (sheriff) court on behalf of the worker, or prosecute the employer. Deliberate refusal to pay the minimum wage is a criminal offence. The most serious cases are triable in the Crown Court (or Scottish equivalent) with potentially unlimited fines.
You may appeal against the notice to a tribunal.
There are six criminal offences relating to the NMW:
- refusal or wilful neglect to pay NMW
- failure to keep sufficient NMW records
- keeping false records
- producing false records or information
- intentional obstruction of a compliance officer
- refusal or neglect to give information to a compliance officer
Those found guilty of a criminal offence in the Crown Court face the possibility of an unlimited fine.
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