Minimum wage rise: Businesses face £20k fine for underpaying staff

By Sophie Witts contact

- Last updated on GMT

Thinkstock/maximkabb
Thinkstock/maximkabb

Related tags: National minimum wage, Minimum wage

Hospitality businesses have been warned they could face fines of up to £20,000 per employee for failing to pay staff the new national minimum wage rate - which comes in to force today (1 October).

Over a million workers will receive a pay rise as the hourly rate increases from £6.50 to £6.70 for those aged 21 and over.

Apprentices are set to see the largest increase, with wages rising 21 per cent from £2.73 to £3.30 per hour.

According to a survey of 1000 UK employers by the Department for Business, Innovation and Skills (BIS), 74 per cent were unaware that rates were rising from 1 October, and 53 per cent did not know it was an offence to pay less than minimum wage.

The Government has warned that businesses could face financial penalties for underpaying staff and face being publicly named.

A statement released by BIS said: "With the vast majority of employees now eligible for the national minimum wage, it is vital that businesses are aware of today’s rate changes and their responsibilities to their employees who will be entitled to an increase in their pay packets.

"If you are not paying at least the national minimum wage you are breaking the law." 

The rise comes ahead of the introduction of the new National Living Wage​ for over 25-year olds next year.

From April 2016 all UK businesses will have to pay staff a rate of £7.20 per hour, rising to £9 per hour by 2020.

According to a survey by M&C Allegra Foodservice​, more than 70 per cent of restaurant and pub operators believe the rise will have a negative impact on their business, though 60 per cent also admitted it could improve staff retention and recruitment.

Businesses which remain unsure about their wage rates have been advised to view official guidlines at https://www.gov.uk/national-minimum-wage​.

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