08-05-2020

A report from the Low Pay Commission (LPC) was published on 7th May 2020 which discusses the issues of non-compliance and enforcement of the NMW.

The main focus of the LPC’s third stand-alone report, which brings forward data from 2019, explores the nature and extent of underpayment, highlighting that the amount of measured underpayment dropped slightly in 2019 compared to the 2018 report, but pointed out that more than 423,000 workers were still recorded as being underpaid, which is higher than in the previous two reporting years, and it seems that underpayment varies significantly dependent on occupation.

The report also places particular attention to the fact that there appears to be a widespread practice of apprentices being underpaid, a number of findings as a result of surveys carried out, have found that approximately one in five apprentices earn less than the amount that they are legally entitled to, this problem appears to be mainly from a point of confusion on the part of an employer and the requirement under NMW legislation that apprentices should be paid for hours that they spend in training, in addition to payment for the hours that they are at work. The LPC has offered several recommendations to government which seek to ensure better protection for apprentices.

Legislation changes that made certain items on payslips mandatory have improved workers’ rights but more needs to be done to ensure that the changes are publicised and enforced effectively in for employees to understand whether or not they have been underpaid.

HMRC’s continued enforcement of the NMW laws in 2018-19, ensured that repayments were made to more workers than ever before where they had previously been underpaid. The report looks at how HMRC’s statistic work and suggests further steps to be taken to ensure that the enforcement regime is as effective as possible.

In its remit to the LPC this year, the Government set a further target for the NLW to reach two thirds of median earnings by 2024. Additionally, the age threshold for the NLW is set to be reduced to 23 in 2021, and to 21 by no later than 2024.

This new remit was announced in the early stages of the Covid19 outbreak, and prior to the scale of its effects on the economy and society were clear. The LPC will, we are sure, have to reassess the effects when making their recommendations to the Government on the 2021 NLW and NMW rates in the autumn of 2020. Whatever the speed at which any age changes or rate increases take place, it will continue to be important for Government, namely BEIS and HMRC, to evaluate and improve the enforcement system, to consolidate the advances of recent years and address the remaining gaps in compliance.


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