New fines for underpaying bosses

Bosses who refuse to pay their workers the minimum wage could be fined £200 for each employee they underpay, under a new government crackdown.

Trade and industry secretary Alistair Darling said he was determined to ensure workers got the money they were entitled to, and today’s new fine would make that clear.

Employers already have to refund the money they owe if caught paying less than the national minimum wage (NMW), and could face prosecution and a possible £5,000 fine.

Under today’s proposals, a worker could make a complaint to the HM Revenue and Customs (HMRC) about their pay, and if upheld, the employer would have to make up the money they owe within seven days or face a fine.

“To those employers avoiding the minimum wage, the message is don’t pay it and you’ll pay the fine,” Mr Darling said.

As well as ensuring the 1.2 million people on the minimum wage a fair deal, he said he was keen to ensure firms who were abiding by the rules were not undercut by rogue competitors – a stance welcomed by business groups.

“Firms who flout minimum wage regulations are providing unfair competition for the vast majority of employers who do not break the law and consequently have to charge higher rates,” said David Frost, director general of the British Chambers of Commerce.

Susan Anderson, director of HR at the Confederation of British Industry (CBI), agreed, saying: “It is therefore right that those firms who have been given ample opportunity to pay their arrears and fail to do so should be penalised.

“The CBI fully supports the government’s resolve to issue penalty notices to firms that fail to comply with enforcement notices.”

However, the Federation for Small Businesses (FSB) warned against any further rises in the minimum wage, which has gone up every year since its introduction in April 1999, to a current level of £5.35 for the over-22s.

“While we welcome any moves to eradicate unlawful and unfair competition, this must be done without unnecessarily disadvantaging the vast majority of law-abiding small businesses,” said employment chairman Alan Tyrrell.

Paymaster general Dawn Primarolo added: “The vast majority of employers are honest and scrupulous but this new measure will put further pressure on those rogue employers who continue to flout the law.”