Since 1 January 2011 a new scheme to name employers who flout the law on the National Minimum Wage (NMW) has come into effect.
The National Minimum Wage (NMW) increased again on 1 October 2010. From this date the NMW rate for 16 and 17 year olds increased to £3.64 per hour, the rate for 18-20 year olds increased to £4.92 per hour and the rate for those aged 21 and over rose to £5.93 per hour. It is important to note that from 1 October the adult rate of NMW has been extended to include 21-year-olds. Also from this date a new apprentice rate of NMW was introduced – an apprentice who is aged 19 or over in the first year of their apprenticeship will be entitled to £2.50 per hour. After that they will be entitled to the normal rate of NMW for their age.
If a worker believes that they may be being paid less than the NMW they can make either an anonymous or a named complaint to the HMRC National Minimum Wage Compliance team. Employers who are found to not have paid the minimum wage will be ordered to pay workers arrears at the current rate of minimum wage and not at the rate which would have been applicable whenever the breach occurred. In addition employers will also have to pay a fine of 50% of the total arrears bill to the HMRC. Employers who fail to pay arrears of wages identified or fines due or who hinder or obstruct an HMRC investigation may be subject to criminal proceedings.
From 1 January 2011 employers who flout the law on the NMW will be named in a press release issued by the Department for Business, Innovation and Skills (BIS). The objectives of this scheme are to raise awareness of NMW enforcement and deter employers who are tempted to flout the law in relation to NMW. The naming scheme is not an alternative to prosecutions and the criteria for the naming scheme and for prosecuting employers are different.
HMRC will refer cases to BIS for naming where they consider that one or more of the following criteria is met:
- there is evidence that the employer knowingly or deliberately failed to comply with their NMW obligations
- there is evidence that the employer has previously received advice from HMRC about the steps they need to take to ensure future compliance and has not taken those steps
- there is evidence that the employer has failed to take adequate steps to keep or preserve NMW records
- there is evidence that the employer has delayed or obstructed a NMW compliance officer in the performance of their duties
- there is evidence that the employer has refused or neglected to answer questions put to them by a NMW compliance officer
- there is evidence that the employer has refused or neglected to provide information or produce documents to a NMW compliance officer
- there is evidence that the employer refused or neglected to pay arrears of the NMW to workers following HMRC intervention.
HMRC will not refer cases to BIS unless the total arrears owed to workers is at least £2,000 and the average arrears per worker is at least £500. Before being named for flouting the NMW law an employer will be given the opportunity to make representations to BIS. BIS will not name an employer where there is a real risk of personal harm to an individual or their family or it would not be in the public interest to name the employer.
For more information on the NMW contact your local CAB. Further help on all aspects of the NMW for both employers and employees is available, in confidence, from the Pay & Work Rights Helpline on 0800 917 2368.
Siobhan Harding is an Information and Policy Officer with Citizens Advice