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HMRC internal manual

National Minimum Wage Manual

HM Revenue & Customs
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Issuing notices of underpayment: showing the penalty, reduction for prompt payment & any suspension on a notice

Relevant legislation

The legislation that applies to this page is as follows:

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

The full penalty will be shown on the notice of underpayment, with an explanation of how it has been calculated (NMWM13220). The penalty is payable to HM Revenue & Customs.

Reduction of the penalty for prompt payment

The notice will inform the employer that the penalty will be regarded as paid if he pays:

  • all the arrears to all the workers named on the notice within 14 calendar days of the date the notice is served (counting the date of service as day 1), and 
  • half the penalty to HM Revenue & Customs within the same 14 days.

If either of these conditions is not met, then the employer is automatically required to pay the full amount of the penalty.

Penalty suspended for criminal proceedings

When a penalty has been suspended (NMWM13190) because certain criminal proceedings have been or may be started against the employer, then the notice of underpayment must tell the employer:

  • the amount of the penalty, and
  • that the penalty has been suspended, and
  • the reason why the penalty has been suspended.

Arrangements for payment

The notice of underpayment informs the employer how the penalty is to be paid. A penalty payslip should be included with the notice of underpayment.