Employers face minimum wage fines
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The Government is to target cheating employers with a new regime of
fines if they pay below the national minimum wage. In a
consultation starting today the Trade and Industry Secretary
Alistair Darling will propose options including fixed penalty fines
linked to the number of workers underpaid. It is also proposed that
for the first time businesses would have to pay interest or other
cash to workers they have underpaid on top of repaying arrears, so
the workforce are...Request free trial
The Government is to target cheating employers with a new regime of fines if they pay below the national minimum wage. In a consultation starting today the Trade and Industry Secretary Alistair Darling will propose options including fixed penalty fines linked to the number of workers underpaid. It is also proposed that for the first time businesses would have to pay interest or other cash to workers they have underpaid on top of repaying arrears, so the workforce are no longer giving "interest free loans" to their employers. Alistair Darling said: "Paying less than the minimum isn't only unfair to the workers- it's unfair to the vast majority of employers who obey the law, because it lets rogue businesses undercut them. "I want to give this simple message to bad employers: pay less than the minimum wage and it will cost you. The vast majority obey the law already. "When we brought in the national minimum wage, we worked closely with business to make sure it was introduced in a 'light-touch' way. It has become part of daily business life. No-one should be in any doubt as to what they need to do." Chief Secretary to the Treasury Stephen Timms said: "The vast majority of UK employers are honest and scrupulous, but we must ensure that all employees are paid fairly and that those who are entitled are given at least the minimum wage. "These proposals will put further pressure on those rogue employers who continue to flout the law. We are determined that every worker should earn a fair wage for a fair day's work." The minimum wage was introduced in April 1999. It is currently #5.35 a week and rises to #5.52 in October. The Government has helped tens of thousands of workers recover #22.6 million in unpaid wages, but up to now, employers have not been punished, as long as they pay up when they are caught. If they refuse to pay increases or back pay, employers already face fines under the existing laws: * A typical penalty for underpaying a single worker is now more than #200. * Employers who fail to pay the minimum wage can face prosecution, risking a criminal record and a #5,000 fine. All complaints are followed up, but some problem sectors are targeted for special attention. Hairdressing was the first, and child care workers the second. The next sector will be hotels, widening out next year to other areas of hospitality. The consultation will also look at enforcement of employment agency standards, seeking views on whether offences should be triable in the Crown Court, and whether the Employment Agency Standards Inspectorate should be given clearer investigative powers to obtain financial information on suspects. The full consultation document is attached. EDITORS NOTES * The current penalty available in legislation is a minimum of #224.70 for non compliance with an enforcement notice. In January 2007 the Government announced that a penalty would be issued in virtually all cases of non compliance with an enforcement notice. Please see http://www.dti.gov.uk/files/file36381.pdf for more information. The government is now interested in doing more to encourage employers to pay the right amount at the right time. * These proposals do not change what employers have to do to make sure they are paying NMW. If any employer is in doubt as to how to comply with the legislation, they should use the many sources of advice that are available, such as the NMW helpline, directgov or the DTI website. Under these proposals, employers would continue to have access to these sources of advice and enquiries in themselves would not trigger enforcement action. * These proposals aim for a simpler, clearer penalty regime to replace the existing national minimum wage penalty regime. * The 2007 Low Pay Commission report recommended that the government consider a new penalty for underpayment of the minimum wage. In March 2007 Alistair Darling agreed to "actively consider" this recommendation. The DTI is responsible for National Minimum Wage policy. HM Revenue and Customs (HMRC) for its enforcement. Employers or workers seeking help and advice about the minimum wage should ring HMRC's confidential helpline: 0845 6000678. http://www.dti.gov.uk/files/file36381.pdf for more information. The government is now interested in doing more to encourage employers to pay the right amount at the right time.* These proposals do not change what employers have to do to make sure they are paying NMW. If any employer is in doubt as to how to comply with the legislation, they should use the many sources of advice that are available, such as the NMW helpline, directgov or the DTI website. Under these proposals, employers would continue to have access to these sources of advice and enquiries in themselves would not trigger enforcement action. * These proposals aim for a simpler, clearer penalty regime to replace the existing national minimum wage penalty regime. * The 2007 Low Pay Commission report recommended that the government consider a new penalty for underpayment of the minimum wage. In March 2007 Alistair Darling agreed to "actively consider" this recommendation. The DTI is responsible for National Minimum Wage policy. HM Revenue and Customs (HMRC) for its enforcement. Employers or workers seeking help and advice about the minimum wage should ring HMRC's confidential helpline: 0845 6000678. |