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With the national minimum wage rising to £6.70 next month and the newly rebranded national minimum Living Wage coming into force next year, it is important for employers to know where they stand and more importantly, what they can expect if they fail to pay the minimum wage due.

In a package recently announced by the government, employers who avoid the responsibility of paying their employees the correct National Minimum Living Wage will incur much harsher penalties come April 2016 when the National Minimum Living Wage for over 25s will be introduced and set initially at £7.20 per hour rising to £9 per hour by 2020.

These measures include:

• Doubling the penalties for non-payment of the National Minimum Wage (which will remain for the under 25s) and also for the new National Minimum Living Wage;
• Increasing the enforcement budget;
• Setting up a new team in HMRC to take criminal prosecutions against those who deliberately do not comply;
• Disqualification from being a company director for up to 15 years for those found guilty.

The penalties for non-payment of arrears move from 100% to 200%, although that percentage can be halved if those same penalties are paid within 14 days. The maximum fine per employee will remain at £20,000.

For both employers and employees, it is vital that both parties are aware of their own legal obligations and rights. Ralli Solicitors LLP provides legal advice in concerns regarding employment law. Their solicitors offer professional advice regarding changing employment contracts.