A new team of HMRC compliance officers will enforce the new national living wage and will have a number of penalties at their disposal to use against wayward businesses.
Business secretary Sajid Javid said, “There is no excuse for employers flouting minimum wage rules and these announcements will ensure those who do try and cheat staff out of pay will feel the full force of the law.
“This one nation government is committed to making work pay and making sure hardworking people get the salary they are entitled to.”
New sanctions will include increased penalties for companies not paying the national living wage. Similarly, anyone found guilty of not paying the new rate could be disqualified from being a company director for up to 15 years.
Announced in the Summer Budget, the national living wage is an extension of the national minimum wage. Applying to workers aged 25 and over, the new national living wage is set at £7.20 an hour; it will rise to £9 per hour by 2020.
Without any London weighting, the government’s rebranding of the living wage is considerably lower than that of the Living Wage Foundation. Currently the living wage for London as set by the Foundation is £9.15 an hour; for the wider UK it is £7.85 an hour.
At the weekend former Sainsbury's chief executive Justin King warned that the living wage will "destroy jobs". By 2020, King argued, the living wage could be "10% or 15% higher" than the minimum wage equivalent. He suggested employers will seek to make their workforces more productive, leading to fewer jobs.