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News - 13 September 2008

Are you keeping up with minimum wage increases?

The Forum of Private Business (FPB) is warning that small businesses face being prosecuted and fined thousands of pounds if they do not comply with an increase in the National Minimum Wage (NMW), which will take effect on 1 October 2008. Research carried out by Bibby Financial Services shows that 31% of the small businesses surveyed are unaware of the forthcoming change.

For workers aged 22 and over, the hourly rate will increase by 21 pence to £5.73 per hour. Workers aged 18 to 21 will be entitled to a rise of 17 pence, to £4.77 an hour, and the hourly rate for workers aged 16 to 17 will rise by 13 pence to £3.53. Businesses that do not pay the new rates face prosecution and a fine of up to £5,000.

However, the change is likely to come as an unpleasant surprise for many of the smallest firms, with 44% of those employing just four members of staff (or fewer) totally unaware of the pending increase, according to the research.

"These changes come about every year and, although there is an additional cost involved, it is important for small firms to comply with the law," said Nick Palin, the FPB’s Director of Finance and Administration. "Those that don’t comply risk paying an even higher price. Recent examples show that the Government is more than willing to prosecute firms if they are in breach of the legislation."

David Robertson, the global Chief Executive of Bibby Financial Services, cited the prosecution in 2007 of a nursery owner for breaking minimum wage laws as evidence of the Government taking a harder line. He said the high level of uncertainty among businesses about National Minimum Wage levels, combined with the Government’s tougher stance, could lead to many more firms being punished for non-compliance.

Read related items on:
Bibby Financial Services
Forum of Private Business
Robertson, David

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