Employers are being reminded by HMRC that automatic penalties have been introduced for those who do not comply with the National Minimum Wage (NMW) Regulations as from the beginning of the current tax year.

The penalty notice is calculated according to the formula shown below.

Original underpayment x Current NMW rate = Arrears
   Original NMW rate

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.

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.

If you would like to discuss the above, please contact us on 08456916075.