Minimum wage: £20,000. fines for rogue employers

Rogue employers who do not pay their workers the National Minimum Wage (NMW) will face an increased penalty of up to £20,000 as part of Government’s crackdown on employers who break the law. Currently employers that break NMW law must pay the unpaid wages plus a financial penalty calculated as 50 per cent of the total underpayment for all workers found to be underpaid. The maximum penalty an employer can face is £5,000.

Following an announcement by the Prime Minister before Christmas, the Government will increase the financial penalty percentage from 50 per cent to 100 per cent of the unpaid wages owed to workers. The maximum penalty will increase from £5,000 to £20,000. Regulations introducing these new limits are subject to Parliamentary approval and are expected to be in force in February 2014. The Government also wants to go further and will bring in legislation at the earliest opportunity so that the maximum £20,000 penalty can apply to each underpaid worker.

Business Secretary Vince Cable said:“Anyone entitled to the National Minimum Wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crackdown on those who do not play by the rules. The message is clear – if you break the law, you will face action.

“As well as higher penalties, we have made it easier to name and shame employers who fail to pay their workers what they are due. We are working with HM Revenue and Customs to investigate non-compliance and facilitate prosecutions in the most serious of cases. We also make sure that every complaint made to the free and confidential Pay and Work Rights Helpline is looked at. The National Minimum Wage plays an important role in supporting low-paid workers whilst making sure they can still find work. Enforcing this is a key to fairness in our workforce.”

The intention is to penalise those with the highest levels of arrears. Employers who are found to have made underpayments of more than £20,000 to any worker after the new laws come into force will not only pay the new higher level of penalties but will face this penalty for each such worker. Where the underpayment for any individual worker or group of workers exceeds £20,000 the penalty will be restricted to £20,000 in relation to that worker or group.

The Unite Union responded to the proposals by business secretary Vince Cable to quadruple the fines on employers to £20,000 would make little difference and left exploited workers valued less than the penalty for touts selling dodgy football shirts. Unite assistant general secretary Steve Turner said: “The problem of low pay is hitting millions of working people struggling to make ends meet. However, raising the maximum fine to £20,000 is simply not enough of a deterrent for employers who are making big profits by exploiting workers.

“Enforcement of the NMW is a shambles and average fines are a disgrace. This needs to be addressed and an active policy of ‘naming and shaming’ bad bosses should be introduced, so their local communities know the hard, ugly truth. This con trick needs to be exposed - the fine is fixed at 50 per cent of the unpaid wages - it is not a fixed £20,000. Further, the £20,000 per employee proposal is only for each employee underpaid by £20,000 - to put it in perspective you will have had to be unpaid (no wages) and working 40 hours a week for over 18 months for this to kick in.

“It’s a joke, leaving workers valued less than a counterfeit football shirt and insulting to hardworking people struggling to get by. We also have a situation where HMRC, which is meant to enforce the NMW, has suffered ongoing cuts under the coalition leaving it unable to tackle the billions in tax avoidance, let alone non-payment of the NMW.”

Unite has repeatedly called for the NMW, currently £6.31 an hour for adults, to be increased by £1.50 an hour, so that purchasing power is put into the pockets of the UK’s low paid.