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Failure to pay minimum wage costs firms

Businesses that failed to pay staff the national minimum wage have been forced to pay back more than £2 million in unpaid salary.

In addition to paying workers back money they owed, 233 employers on the government’s ‘named and shamed’ list were fined £1.9 million.

The national living wage is currently £7.50 an hour for employees over the age of 25, and £7.05 an hour for those aged between 21 and 24.

The Department for Business, Energy and Industrial Strategy said retail, hairdressing and hospitality businesses were among the worst offenders.

Common errors made by businesses include:

  • deducting money from salary to pay for uniforms
  • failure to account for overtime hours
  • wrongly paying apprentice rates (£3.50 an hour for under-19s or those in their first year) to workers.

Margot James, business minister, said:

“It is against the law to pay workers less than legal minimum wage rates, short-changing ordinary working people and undercutting honest employers.

“Today’s naming round identifies a record £2 million of back pay for workers and sends the clear message to employers that the government will come down hard on those who break the law.”

Melissa Tatton, director at HMRC, added:

“HMRC is committed to getting money back into the pockets of underpaid workers, and continues to crack down on employers who ignore the law.

“Those not paying workers the National Minimum or Living Wage can expect to face the consequences.”

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National living wage affects SME profits

Over half (64%) of small businesses are seeing profits dip as a result of the latest national living wage (NLW) rise, according to a study.

The NLW increased from £7.20 to £7.50 per hour on 1 April 2017. 

The Federation of Small Businesses (FSB) polled 835 businesses and found 39% have put up prices to cope with the wage increase.

A further 24% have either cancelled or scaled down investments, while 22% reduced working hours or hired fewer staff.

Additionally, 43% had to increase wages in line with the NLW, suggesting that the majority of owners are already paying their workers above the new rate.

Mike Cherry, national chairman at the FSB, said:

“Small businesses owners have demonstrated their resilience in meeting the challenge set by the NLW, with many cutting their margins, or even paying themselves less, to pay their staff more.

“In sectors where margins are tight, small firms are resorting to more drastic measures to cope with the NLW. Therefore it is vital that the NLW is set at a level that the economy can afford, without job losses or harming job creation.”

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Proposed changes to improve funeral payments scheme

The government is proposing changes to the way individuals can claim payments to cover funeral costs for an immediate friend or relative.

The consultation aims to clarify who is eligible and simplify the process of claiming the Funeral Expenses Payment.

The following proposals are being considered:

  • allowing recipients of the scheme to receive contributions from relatives, friends or charities
  • exceptions for people living in care homes
  • extending the claim period from 3 to 6 months
  • clarifying exclusive rights for burial.

Individuals in receipt of benefits, such as income support, universal credit and working tax credits, may be eligible for the funding.

Funeral Expense Payments can help cover:

  • burial fees
  • medical certification fees needed for cremations
  • costs to arrange or travel to the funeral or transport the body more than 50 miles
  • death certificates or other documents
  • up to £700 towards funeral expenses, such as funeral director’s fees and coffin.

Caroline Dinenage, family support, housing and child maintenance minister, said:

“We understand what a distressing and difficult time it can be losing a loved one and we want to make the process of claiming a funeral payment as simple as possible.”

Louise Eaton-Terry, funeral expert at Royal London, added:

“Our research shows people are taking on an average debt of around £1,600 to pay for funeral expenses, so while the consultation is a step in the right direction; it fails to address the value of the award, which falls short of covering funeral costs. 

“The decline in the number of successful funeral payment applications is also a concern, which the consultation doesn’t address. We want the Government to go further and commit to increasing the value of the social fund funeral expenses payment and tackling funeral poverty.”

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