It is part of a series of measures announced by Business Secretary Sajid Javid to ensure employers pay the legal minimum rate and further backed up by David Cameron who announced stringent penalties for non compliant employers. These include doubling penalties for non-payment of the NMW, increasing the enforcement budget, and disqualifying those found guilty from being a company director for 15 years.
“This one-nation government is committed to making work pay and making sure hardworking people get the salary they are entitled to,” added Javid.
From next April, firms will have to pay all workers aged over 25 at least £7.20 an hour - compared to £6.50 now. The minimum wage will be increased to £9 by 2020 with Britain having one of the most generous pay guarantees in the world.
“There is no excuse for employers flouting minimum wage rules,” said Javid. “These announcements will ensure those who do try to cheat staff out of pay will feel the full force of the law.”
The new compliance team will investigate the most serious cases of employers failing to pay NMW, including the national living wage, which will be introduced from April 2016. It will have power to issue penalties, pursue prosecutions, and name and shame the most exploitative businesses.
Although the maximum penalty of £20,000 a worker remains, the calculation of penalties on those who fail to comply will increase from 100 per cent of arrears to 200 per cent. However, this will be halved if payment is made within 14 days. This reform is intended to increase compliance and ensure tough consequences for those who break the law.
The government also announced that it will work with payroll providers to ensure their software can check that staff is paid what they are entitled to. It will also improve guidance and support.