Employers flouting the new act may be subject to an automatic fine of £5,000, writes Fergal Dowling.
THE NATIONAL Minimum Wage (NMW) rose from £5.52 to £5.73 per hour on 1 October. Eighteen- to 21-year-olds will now enjoy a rate of £4.77, an increase of 17 pence, while 16- to 17-year-olds have had an increase from £3.40 to £3.53.

The government has proposed that employers found to be flouting the NMW Act may be subject to an automatic fine of £5,000.

The most serious offenders can expect to be tried in a Crown Court, where they will face an unlimited fine. Some employee bodies believe that the rate needs to be increased further to allow for rising utility bills.

The increase follows recommendations from the Low Pay Commission (LPC). Employers must apply the appropriate NMW figure to an employee's basic wage. It is prohibited to arrive at the NMW by including money paid to employees for overtime, or as a bonus or shift allowance.

Employers who make deductions from employees to cover the cost of items such as corporate workwear must ensure that the employees still receive at least the NMW following those deductions.

The NMW was launched in 1999 at £3.60 an hour. It applies to most adult workers who work legally in the UK (excluding the Channel Islands and the Isle of Man), are neither self-employed nor voluntary workers, and have a written, oral or implied contract. Unions estimated in December 2007 that there were still 150,000 workers receiving less than the statutory minimum.

Enforcement powers to date have recovered more than £27M in unpaid wages since 1999 but unions want to see more action.

Any employee or third party who wants to make a complaint regarding breaches of the act can contact the HM Revenue and Customs (HMRC) national minimum wage enforcement unit. This has a 16-team network of compliance officers, a help line capable of conversing in around 30 languages, while its website has online and downloadable complaint forms.

Employers must keep records demonstrating compliance with the NMW or risk a fine. These must be kept for a minimum of three years after the current year's pay records, although six years may be more sensible as employers can face legal action for failure to pay the NMW up to six years after the alleged offence.

The records may be called upon as evidence of compliance in the event of a dispute or if requested for inspection by an HMRC minimum wage compliance officer or, indeed, by members of the workforce.

Employers should ensure that their policies and procedures are primed to meet the new NMW legislation and, if in doubt, they should seek legal counsel.