Business

Employers who fail to pay minimum wage to be named

  • 23 August 2013
  • From the section Business
worker in factory
Adults should be paid at least £6.19 an hour

Employers who fail to pay the national minimum wage will be named and shamed under plans announced by the government.

It hopes the new rules, which come into effect in October, will embarrass firms into paying up.

The TUC estimates that up to 250,000 workers are not being paid the minimum wage.

But to date only one employer, a hairdresser from Leicester, has been named publicly for failing to pay it.

To be named under the current rules, an employer has to owe workers at least £2,000, and the average owed per worker has to be at least £500.

But these restrictions will now be removed, allowing employers to be named much more easily.

"Paying less than the minimum wage is illegal," said Jo Swinson, the Employment Relations Minister.

"This gives a clear warning to rogue employers who ignore the rules, that they will face reputational consequences as well as a fine if they don't pay the minimum wage."

Enforcement

At the moment employers found to be breaking the law have to pay back the amount they owe, and in addition face financial penalties of up to £5,000.

In June this year, Arcadia, the owner of Top Shop, was among nine firms that had to pay out nearly £200,000 for failing to pay interns the minimum wage.

In total last year HM Revenue and Customs (HMRC) identified 736 employers who failed to pay the national minimum wage.

Following their actions, more than 26,500 workers received the wages they were owed, amounting to £3.9m.

But the TUC suspects the problem is much larger, given the thousands of people who complain every year to the minimum wage telephone helpline.

It says many are too fearful to complain publicly.

It has welcomed the government's move, but wants to see more prosecutions and the maximum £5,000 fine increased.

"Employers need to know that there will be no hiding place if they break the law," said TUC general secretary Frances O'Grady.

"The government must put more money into enforcement so that there are fewer places for even the most determined minimum wage cheats to hide," she said.

Labour also said the government needed to take stronger action on enforcement.

"The naming and shaming of unscrupulous businesses which flout the national minimum wage will be worthless unless ministers commit to properly enforcing the minimum wage, which they have so far failed to do," said Ian Murray, Labour's shadow minister for employment relations.

The current minimum wage for adults is £6.19, rising to £6.31 in October.

Anyone who is not receiving it can phone the National Minimum Wage helpline on 0845 6000 678.

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