South: 80% of professional services sector unaware of fines related to minimum wage

Around 80% of the professional services sector do not know the fines they face for not paying eligible employees at least the National Minimum Wage (NMW).

The Department for Business, Innovation and Skills carried out the nationwide survey of 1,000 employers which also found that in the professional services sector:
- 21% employ people on the NMW
- 75% didn’t know what the hourly NMW rate would be from October 1
- 45% didn’t know it was an offence not to pay NMW or falsify pay records
- 57% didn’t know they must repay workers they have underpaid
- 57% didn’t know companies could be named and shamed for not paying.

The penalty for not paying your employees at least the NMW they are entitled to includes a fine of up to £20,000 per worker and on top of this the business could be publically named.

The revelation provides the sector with a timely reminder to ensure it is paying its employees at least the NMW from October 1, which has increased from £6.50 to £6.70 for 21-year-olds and over. This 3% increase in the adult rate represents the biggest real increase in the NMW since 2006 and moves the wage closer to the average living wage than ever before.

The new rate will mean that a full-time employee, working 35 hours, will see an additional £364 in their annual pay packets, the largest cash increase since 2008. The new apprenticeship rate, the largest increase at 21%, will see apprentices receive £1,037 more pay.

Employers have said they are overwhelmingly in favour of the NMW, with 88%, across all sectors, thinking it was a good idea. Although the survey showed some discrepancies about who they thought were eligible:
- 14% didn’t think full-time employees were eligible
- 18% didn’t think part-time employees were eligible
- 31% didn’t think agency employees were eligible
- 41% didn’t think trainees or those on probation were eligible.

Professional services employers have also seen other benefits from paying their employees the NMW, with 78% reporting an increase in productivity, loyalty and morale and frequent returning customers (76%).

Nearly 1.5 million workers in the UK are estimated to being paid at or below the NMW of £6.70, according to a separate ONS Annual Survey of Hours and Earnings from 2014. Adults over 21 on the NMW account for 6% of the national workforce.

The new rates are:

 

 

With the vast majority of employees now eligible for the NMW, it is vital that businesses are aware of these rate changes and their responsibilities to their employees who will be entitled to an increase in their pay packets.