National minimum wage and penalty notices

The current adult rate of NMW is £5.35 per hour.

In practice, when a complaint is brought concerning the NMW, Her Majesty’s Revenue and Customs (HMRC) looks into the matter. Where it finds that the employer has not been paying the NMW and those arrears remain unpaid, it serves an enforcement notice. This specifies both the amount owed to workers and the period within which the employer must pay or appeal.

Those employers who comply with the enforcement notice within 7 days are not subjected to a penalty. By contrast, employers who fail to comply (unless they appeal the enforcement notice within 4 weeks) will receive a penalty notice.

Penalties are calculated on a combined ‘per worker’ and ‘per day’ basis. So, for each worker in respect of whom an employer has failed to pay the NMW, it will have to pay twice the adult NMW rate for each day that it fails to comply with the enforcement notice. So, the longer the period of non-compliance and the greater the number of workers for whom this is true, the higher the penalty.