Asked by
To ask His Majesty’s Government what steps they are taking to
improve the enforcement of national minimum wage legislation.
The Parliamentary Under-Secretary of State, Department for
Business and Trade () (Con)
My Lords, the Government take enforcing the minimum wage
extremely seriously. We are clear that anyone entitled to be paid
the minimum wage should receive it. Robust enforcement action is
taken against employers who do not pay their staff correctly.
Since the introduction of the national minimum wage in 1999, the
Government have overseen the repayment of more than £173 million
to 1.4 million workers, issued nearly £86 million in financial
penalties and completed more than 87,000 investigations.
(Lab)
I thank the Minister. The International Labour Organization
recommends that there should be one inspector for every 10,000
workers to check that employees are being paid the minimum wage.
The UK ratio is 0.4% for every 10,000 workers; that way, UK
employers can expect an inspection every 500 years. That is not
good enough. You only have to talk to overseas students and
workers in minority communities to see how widespread the problem
is. In order to stop paying the minimum wage to some employees,
employers make them work 20 hours, but on the books they are
paying them for only 10 hours—this is one way they get round it.
We need stronger and tougher sanctions against rogue employers,
so we can get on with it.
(Con)
The Government remain totally committed to the effective
enforcement of employment rights and provide a lot of funding,
including over £35 million this year to the existing dedicated
labour market enforcement bodies. That is a 121% increase in
funding since 2010, so a lot of money has gone into this area. On
top of that, we provide funding of over £50 million per annum to
ACAS, to support employment tribunals. We have had great success
in reducing the number of companies not paying the national
minimum wage.
(LD)
My Lords, we heard about in-work poverty in the previous
Question. One reason there is so much in-work poverty is that too
many workers are slipping through the national minimum wage net.
One of the key areas in this is food delivery apps. Uber
justifies its treatment of its employees as so-called
self-employed as balancing flexibility and protection. Does the
Minister agree that it is the food delivery apps that get all the
flexibility, while the workers get no protection at all?
(Con)
In the recent Supreme Court judgment on Uber, it was made clear
that those who qualify as workers under existing employment law
are entitled to core employment rights and that all gig economy
businesses must ensure that they fulfil their legal
responsibilities. We now have a situation in which the national
minimum wage is two-thirds of hourly median pay, and under OECD
rules that means it is no longer classified as low pay. We know
that 5% of our workforce is on national minimum wage, which is a
great success.
(Lab)
Currys, EasyJet and Greggs are part of a parade of companies that
never forget to pay bosses but somehow forget to pay the minimum
wage to workers. Their memory can be improved by effective
sanctions requiring that the fine for not paying the minimum wage
must equal remuneration of the entire board, of which at least
50% must be paid personally by directors. When will the Minister
introduce this sanction?
(Con)
One of the sanctions available to the Government is the naming
and shaming scheme, which is very successful. We have a large
number of companies which have been subject to that, and we have
therefore increased greatly the number of companies complying as
a result. When HMRC finds employers which breach this, it can
impose a penalty of up to 200%; the penalties are severe for
companies which do not comply.
(Con)
My Lords, the Minister pointed out the work by the HMRC national
minimum wage enforcement team, and the general consensus is that
it is doing an effective and professional job. Does it concern
him that 95% of the 65,000 HMRC staff are working from home at
least one day a week? Can he tell the House whether this is
hampering effectiveness?
(Con)
I thank my noble friend for his question. There are a number of
bodies that enforce our employment laws in the UK. Obviously,
HMRC is the body that oversees the national minimum wage; my
department, DBT, ensures that agency workers are well protected;
and within the Home Office, we have the Gangmasters and Labour
Abuse Authority. So we have three very effective regulators,
which are well funded, and we continue to pursue, name and shame,
and impose penalties on companies that do not respect the
law.
(Lab)
My Lords, this year we celebrate 25 years of the national minimum
wage, which was brought in by the Labour Government. It has
played a vital role in protecting the UK’s lowest-paid workers.
Some 524 employers were recently named and shamed for underpaying
around 172,000 national minimum wage employees by nearly £16
million. Can the Minister confirm that these underpaid employees
have now received all the pay that they have earned and how often
sanctions beyond the standard fines are applied to repeat
offenders?
(Con)
Since the introduction of the national minimum wage in 1999, the
Government have ordered employers to repay over £173 million to
1.4 million workers. It is far more effective that the employers
are made to pay the workers than be dragged through courts, which
delays payments to workers and does not provide any respite. I am
interested in the fact that this is the 25th anniversary of the
national minimum wage. When this Government came to power in
2010, the number of employees on low hourly pay was 21% of the
workforce; today, that is 8.9%. I also point out that, when this
Government took over from Labour in 2010, benefits were the
largest source of income for the poorest working-age households,
but under the Conservatives it is now their wages.
(Lab)
Is it not the case that far too many employers still find it to
their own advantage to pay below the living wage and below the
basic wage? Is it not time that we made this a criminal act, so
that we can hold the directors of those companies accountable for
their actions?
(Con)
As we have said before, our labour market in the UK is one of the
most sophisticated and best-working in the world. Out of a
population of 66 million people, 33 million are working, and only
5% of that workforce is on the minimum wage. In the meantime, 30%
of the population do not pay any tax and the 1% highest earners
pay 30% income tax. I think noble Lords would agree that our
workforce is in good shape. Instead of criminalising employers,
we need to spread the education required to make sure that
everyone has higher wages.
The (CB)
My Lords, some of the examples that have been given are
technically people who are self-employed. Does the Minister not
believe that the whole area of self-employment needs to be looked
at very carefully in this respect?
(Con)
Of the 33 million workers in the country, there are 27 million
employees; that means that we have a proportion of the workforce
which is self-employed. You might say they are the unsung
heroes—the ones who put their laptop on at 8 am and close it down
at 10 pm—and they deserve our respect.
(Lab)
My Lords, is it not the case that, two years ago, the Government
undertook to close the loophole which enabled P&O Ferries to
pay way below the minimum wage? Has the Minister seen the reports
in yesterday’s newspapers that many of its employees are
currently being paid half the minimum wage? What are the
Government doing about this?
(Con)
Obviously, that case is well known, and P&O was rightly named
and shamed. I saw the article but I am not aware of the details
of the case. However, I am very clear that we will check to make
sure that P&O continues to act within the law.
(Lab)
My Lords, in its day, the national minimum wage was indeed an
achievement. However, does the Minister agree with me, and with
the OECD and the ILO, that the best way to ensure that workers
have sustainable good pay and conditions is through sectoral
collective bargaining—for example, in the care sector?
(Con)
I am sure we all agree on one thing: that we want our workforce
in this country to be well paid and to increase their training
and skills. Surely the best form of welfare we can give anybody
is a good job.
