Businesses still failing to meet national minimum wage rules 25 years on
Businesses still failing to meet national minimum wage rules 25 years on
As the national minimum wage reaches its 25th anniversary today, there continues to be a high level of non-compliance among employers, warns accountancy and business advisory firm BDO.
Since the introduction of the national minimum wage in 1999, HMRC has carried out 87,000 investigations, issued £86m in fines and enforced £117m of arrears.
In February this year, HMRC named over 500 companies found to be in breach of the rules and ordered them to pay back £16m in arrears.
Since the national minimum wage naming scheme was first introduced in January 2011, over 3,200 employers in total have been identified as being non-compliant.
When it was first introduced on 1 April 1999, the national minimum wage was set at a rate of £3.60 per hour. This will have risen to £11.44 from 1 April 2024.
Based on a 35-hour working week, someone on the national minimum wage in England and Wales would have earned £5,925 in 1999/2000 after tax and NIC, whereas a worker can expect to take home £18,512 in 2024/25. This represents a 70% increase above inflation.
Paul Falvey, a tax partner at BDO said:
“While there was some opposition to the national minimum wage prior to its introduction 25 years ago, businesses quickly adapted and it’s now widely accepted.
“That said, it hasn’t always proved to be easy for businesses to comply. Just last month, over 500 businesses were named and shamed for not complying with the rules.
“While some of these breaches may have been deliberate, some employers may have inadvertently made mistakes when calculating workers’ pay. This can sometimes happen when employers fail to fully take account of actual hours worked, the cost of uniforms, salary sacrifice schemes or other voluntary deductions. “While some businesses – and particularly those in the retail and hospitality sectors - may balk at the 9.8% rise in the national minimum wage rate coming into force from today, the increase will provide a welcome boost to low earners who are among those who’ve been most affected by the recent cost of living crisis.
“However, next year’s rise in the national minimum wage is unlikely to be at the same level. The Low Pay Commission is projecting that the national living wage will be between £11.61 and £12.18 in April 2025, with a central estimate of £11.89.”
ENDS
Note to editors.
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