Government to strengthen minimum wage penalties

The Department of Trade and Industry has set out its proposals for changes to the regime of penalising employers that fail to comply with national minimum wage legislation.

The Government's consultation paper considers the Low Pay Commission's recommendation that "as a deterrent to non-compliance, the government introduce a penalty to apply to any employer found to have underpaid the minimum wage". Under the proposals, a mandatory penalty would be introduced for minimum wage breaches.

Currently, an investigation into the alleged breach takes place (during which the employer can pay arrears); the employer is then issued with an enforcement notice (an official demand that the arrears should be paid); and a penalty notice is given if the enforcement notice is not complied with.

The Government suggests that the introduction of a mandatory penalty would tackle the problem of the large number of offending employers that avoid a fine by paying arrears before a penalty notice is given.

The deadline for responses is 8 August 2007.

  • Employers face minimum wage fines   Read a summary of the proposals on the Government News Network website.

  • National Minimum Wage and Employment Agency Standards enforcement consultation   Read the consultation in full on the DTI website.

    Also

    National minimum wage: 'Cautious' October 2007 increases announced   The government has announced a modest 3.2% increase to the adult national minimum wage rate, raising it to £5.52 from 1 October 2007. This is in contrast to the inflation-busting increases seen over the last four years.

    Employers' views on the national minimum wage   An Employment Review survey finds widespread employer support for the minimum wage at its current level, despite evidence that it is becoming harder for employers to set minimum rates above the NMW.

    NMW continues to bite for minority of employers   More than one-third of employers had to increase their minimum pay rate to comply with the uprating of the national minimum wage in October 2006, but the majority feel that the existing rate of the NMW is about right or even too low. Employment Review investigates.

    Employers to be fined for non-payment of minimum wage   The Department of Trade and Industry has published its policy on issuing penalties for non-payment of the national minimum wage.