Minimum wage crackdown announced
Stricter penalties are to be applied to employers who avoid paying the national minimum wage, the government has announced.
The most serious offenders could face unlimited fines, arrears will be calculated in a new way, and inspectors will be given greater powers to investigate firms that break the rules.
At present, there are no initial penalties for rogue employers who pay workers below the minimum wage, and arrears are worked out at the rate of pay which applied when the underpayment was made.
The new rules mean that employers guilty of flouting the minimum wage will have to pay a fixed penalty fine. The penalty will be established at half of the total amount of the arrears that are owing, framed by a minimum of £100 and a maximum of £5,000.
Employers who persist in breaking the law, however, could find themselves landed with an unlimited fine and, in the most serious cases, a possible court appearance.
Arrears will be calculated at the current rate for the minimum wage.
The new enforcement regime will also hand broader powers to the Employment Agency Standards Inspectorate, allowing them greater scope to access financial information to help them check whether a worker’s complaint is an isolated instance or an example of widespread abuse.
Pat McFadden, the Minister for Employment Relations said: “The minimum wage was a very important new right for people at work and we want to see it properly enforced. Paying less than the minimum wage and breaking agency legislation isn’t only unfair to the workers – it’s unfair to the vast majority of companies who obey the law, because it allows cheating operators to undercut them.”
Mr McFadden added: “Until now, employers would only face a penalty if they continued to underpay the Minimum Wage once caught. Now there will be a penalty for all employers found underpaying. Most businesses do treat their staff fairly. These reforms are targeted at those who don't. Legitimate businesses will therefore benefit from this clearer and more effective enforcement on those who do the wrong thing.”
Date:7 December 2007
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