Car dealers are being alerted to the fact the maximum penalty for not paying the national minimum wage has increased from £20,000 per employer to £20,000 per employee, from May 26.

ASE’s tax manager Bett Twiggs (pictured) said: “Whilst most employers would not consider themselves to fall foul of this legislation, it is easy to do so where a sales exec is on a low salary plus commission.

“The reference period for the calculation cannot be longer than 31 days and if there is little or no commission in a given month, there is a chance this could fall below the minimum.  In addition any salary sacrifice arrangements will reduce the level of hourly pay, so it is easy to see that this could occur inadvertently”.

Bett said this penalty is in addition to the requirement to immediately pay the employee any arrears due.

Previously the maximum penalty was £5000 and the £15,000 increase came into force earlier in the year.

National minimum wage rates

Year21 and over18 to 20Under 18Apprentice*
2014 (current rate)£6.50£5.13£3.79£2.73
2013£6.31£5.03£3.72£2.68
2012£6.19£4.98£3.68£2.65
2011£6.08£4.98£3.68£2.60
2010£5.93£4.92£3.64£2.50


* This rate is for apprentices aged 16 - 18 and those aged 19 or over who are in their first year.