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10/12/2015 2:19:24 PM

Employers face fines for failing to pay staff National Minimum Wage

Following the General Election, new employment law changes are causing employers to pay heed or face the consequences.

Scotland-based Employment Law and HR specialist, Empire, is advising employers to make contingency plans for new legislation, which includes changes to the National Minimum Wage, zero-hours contracts, holiday pay, and safety regulations.

CEO at Empire, Steve Cook, said: “The election in May meant limited changes to employment legislation earlier in the year, however post-election promises are now taking shape which might leave some employers financially exposed.”

As of the 1st October 2015, the National Minimum Wage increased to £6.70 per hour for an adult but employers who fail to increase wages in line with legislation face a penalty of up to £20,000 per worker.

Employers struggling to meet the demands of an increased National Minimum Wage will be dismayed to learn that the government is introducing the National Living Wage in April; workers over the age of twenty-five will be paid a minimum of £7.20 per hour to reflect the cost of living.

Cook added: “Increasing the National Minimum Wage and introducing the new National Living Wage will impose a heavy burden on smaller companies and those employing a large number of unskilled workers. The increased costs could result in employers discriminating against workers over twenty-five which though tempting but would be illegal.”

Debate over the future of zero-hours contracts could also hit employers. During the election, the merits of this type of employment contract were debated at length. As a result, employers are now prohibited from including an exclusivity restriction to prevent casual staff from working elsewhere - this could lead to staff shortages and decreased productivity for some employers. Further changes are being considered that include requiring employers to pay compensation to workers with a zero-hours contracts.

On zero-hours contracts, Steve Cook said: “The new Labour leader Jeremy Corbyn has pledged to ban zero-hours contracts and impose a minimum number of hours on contracts, however, many workers enjoy the flexibility these type of contracts offer – giving employees more time with children or to care for elderly relatives. Furthermore, employers juggling peaks and troughs in demand may find it difficult to commit to paying employees at a time when their business is flat."

Mr Cook said. “Employment laws are constantly changing and businesses need to be aware of the changes that affect them to avoid getting on the wrong side of the law. Failure to comply with new rules can lead to penalties and potentially expensive tribunal claims.” 

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