Rate of record
Minimum-wage penalties for employers
The civil penalty is 200% of the arrears, capped at £20,000 per worker. The criminal route is reserved for the most serious cases and can disqualify directors.
The civil penalty
HMRC/FWA issues a notice of underpayment requiring arrears at the current rate plus a penalty of 200% of those arrears, capped at £20,000 per worker. A 50% prompt-payment discount applies if both arrears and penalty are paid within 14 daysgov.uk.
The £20,000 per-worker cap
The penalty cap applies per worker, not per case. A breach affecting 100 workers can trigger up to £2,000,000 in penalties on top of the back-pay liability. For a deliberate systemic breach (uniform scheme, sleep-in time, salary sacrifice) the exposure is material at the franchise or group level.
Criminal prosecution
The criminal route under section 31 of the National Minimum Wage Act 1998 is reserved for the most serious cases: refusal to pay, refusal to keep records, obstructing an inspector, falsifying recordslegislation.gov.uk. Penalties on conviction are unlimited fines in the Crown Court.
Director liability
Directors and officers can be personally liable where the offence is committed with their consent, connivance or attributable to neglect. The Insolvency Service can disqualify directors of named employers from acting as a company director for up to 15 years.
The 14-day discount
Settling arrears and penalty within 14 days of the notice of underpayment cuts the penalty by 50%. The arrears (current-rate) are not discountable.