Employers who avoid paying the national Living wage will face penalties under new government regulations

1 September 2015

David Cameron has announced that employers who fail to comply with the new national living wage will face fines or will be considered for disqualification from being a company director for 15 years. Mr Cameron said that the new pay policy would only work if “properly enforced” and that that the government would be funding a new unit at HM Revenue & Customs that will put pressure on firms who avoid agreeing with this.

In The Times, the Prime Minister said that the new measures were proposed to send a message to “unscrupulous employers” who exploit workers. He stated that these sanctions would ensure that “people properly benefit from the recovery” and further added that they contrasted the “anti-business” stance adopted by the current Labour leadership candidates.

Earlier this year, signs of the Government taking a hard approach against firms failing to pay the minimum wage became more evident as 162 firms were fined for non-compliance in a crackdown that began 18 months ago.

However implementing a higher living wage will also shift the responsibility of helping the less fortunate to private institutions and away from Government benefits such as tax credits. This justifies Mr Cameron as an avid supporter of the private sector in helping the poor by increasing wages as he continues to scale back public spending.

In the recent Budget, Chancellor George Osborne stated that the national minimum wage will rise from £6.50 to £7.20 next April for the over-25s. It will then rise to £9 an hour by 2020, benefiting around 2.7 million low wage workers.

Those under 25 will remain on current lower minimum wage rate – in spite of cuts to working tax credits and housing benefit.

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