Is the National Living Wage causing problems?

I think that most employers would take the view that the principle that employees should be paid a fair wage for their work is one that should be supported. However, sometimes a one size fits all approach can throw up anomalies. I should be clear: I’m not talking about those who exploit people to work excessively long hours for very poor pay (as low as £2.00 per hour), often in plainly unacceptable working conditions. I’ve written in this blog about people who have been kept effectively as slaves in the most appalling circumstances and these employers should be rooted out and dealt with severely, where appropriate in the criminal courts.

It is worth remembering that, when introduced on 1 April 1999, the adult National Minimum Wage was £3.60 per hour. Since then, it increased steadily for a number of years (around or a little ahead of inflation) but the big jump came on 1 April 2016 when it was hiked from £6.70 to £7.20 as part of the merger and rebrand as the National Living Wage. Subsequent increases (including those coming into effect on 1 April 2018) are here.

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Employees who are paid below the minimum wage can complain to an employment tribunal or to HMRC. If HMRC upholds the complaint the employer can be sent a notice of arrears plus a penalty. The maximum fine for non-payment (in addition to making good the arrears) is £20,000 per worker. In recent years HMRC have made a point of publishing (with high profile PR) lists of those businesses that have paid below the prescribed rates. It is not widely known that, in addition, directors of defaulting companies can be banned from being directors (or shadow directors) of any company for up to fifteen years.

So, what are the problems referred to in the title?

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