Financial Implications

FinancialThe following reflect the changes as they are introduced by legislation, and particularly with regard to the penalties, are worth bearing in mind when considering the benefits of keeping, or arranging to be kept up to date with legislation:-

  1. Minimum Wage Increase (1 October 2011)
  2. Compensation Limits (February 2011)
  3. Fines for Minimum Wage Payers
  4. Statutory Pay Increases
  5. Smoking Penalties
  6. Migrant Workers
  7. Consultation Penalties
  8. Corporate Manslaughter
  9. Health & Safety Penalties
  10. Bribery Act 2010

1. Minimum Wage Increase (1 October 2011)

The adult rate will rise to £6.08
The rate for 18-21 year olds will increase to £4.98
The rate for 16-17 year old rate will increase to £3.68

The rate for apprentices will increase to £2.60


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2. Compensation Limits Increase

From February 2011

Limit on amount of compensation for unfair dismissal £68,400

Maximum amount of ‘a week’s pay’ for the purpose of calculating a redundancy payment or for various awards including compensation for unfair dismissal £400

Maximum unfair dismissal award (basic plus compensatory) £80,400

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3. Fine for Non-Minimum Wage Payers (January 2007)

The DTI has published a policy document containing its policy on issuing fines to employers who do not pay the minimum wage.
The policy document states that a fine (approximately £207 per week for each full time employee) will be levied if the minimum wage arrears have not been paid within seven days of service of an enforcement notice.
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4.Statutory Pay (April 2009)

Standard rate of Statutory Sick Pay rises to £81.60 per week.
Standard rate of Statutory Maternity Pay rises to £128.73 per week
Standard rate of Statutory Paternity Pay rises to £128.73per week
Standard rate of Statutory Adoption Pay rises to £128.73 per week
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5. Smoking

An employer who fails to display a prominent ‘No Smoking’ sign is subject to a fixed penalty of (discounted to £150 if paid within 15 days). If unpaid (or the fixed penalty notice is challenged), a fine of up to £1,000 (and a criminal record) may be levied.
An employer who fails to take reasonable steps to prevent smoking (and displaying the ‘No Smoking’ sign is not enough) is liable to a fine of up to £2,500. There is no fixed penalty alternative.
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6. Migrant Workers

2008 sees radical changes being introduced into all aspects of Business Immigration with a penalty of £10,000 per illegal employee
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7. Consultation Penalties

Failure to enter into formal Information and Consultation agreements when so requested can result in a fine of up to £75,000
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8. Corporate Manslaughter

The Company faces the risks of £Unlimited fines, Remedial Orders, and adverse publicity
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9. Health & Safety

Fines range from basic breaches at a maximum £5,000, rising to £20,000, before then moving on to £Unlimited fines, and imprisonment of the Directors, dependent upon the nature of the breaches of the legislation, and the degree to which the Companies have complied and worked with the enforcement authorities. Cases are heard in the Magistrates and Crown Courts, and generally the former reflect the comparatively lesser severity.
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10. Bribery Act 2010

Effective from July 2011

Individuals:- Summary offence – imprisonment for up to 12 months and fines up to £5,000.  On indictment, up to 10 years imprisonment and £unlimited fine.

Commercial organisation failing to prevent bribery – £unlimited fine, potential confiscation order under the Proceeds of Crime Act 2002, and a company director may also be disqualified under the Company Directors Disqualification Act 1986.
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