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HMRC internal manual

National Minimum Wage Manual

Issuing notices of underpayment: when to include a penalty on a notice

Relevant legislation

The legislation that applies to this page is as follows:

  • National Minimum Wage Act 1998, sections 19A & 19B

Any arrears from 6 April 2009

A notice of underpayment must always include a penalty (NMWM13220) if the notice shows arrears for any worker in a pay reference period starting on or after 6 April 2009 unless the penalty is not applied, under a direction (NMWM13200) issued by the Secretary of State for Business, Innovation & Skills.

The notice must specify the amount of the penalty and show how the penalty has been calculated.

A notice will include a penalty whenever there are arrears for pay reference periods starting on or after 6 April 2009. This applies even when the underpayment associated with those arrears is nil in which case the minimum penalty will apply (NMWM13220).

There may be occasions where it will be necessary to issue more than one notice of underpayment to the employer, see NMWM13222.

All arrears before 6 April 2009

Do not include a penalty if all the arrears for all the workers named on the notice of underpayment are wholly for pay reference periods starting before 6 April 2009.

Secretary of State Directions

The Secretary of State for Business, Innovation & Skills (NMWM02020) can issue directions stipulating when a penalty should not be imposed. The Secretary of State has issued a direction stating that a penalty will not be imposed in certain circumstances (NMWM13200).

Suspending a penalty

In certain circumstances a penalty must be imposed and immediately suspended (NMWM13190).

Issuing a penalty without a notice

A penalty cannot be issued separately from a notice of underpayment.