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date: 8 August 2007

embargo: immediate release

TUC calls for Government overhaul of minimum wage enforcement, and crackdown on employment agencies

The TUC is today (Wednesday) calling on Government to look at new ways of enforcing the minimum wage and finally bringing rogue employment agencies to task, in its submission to the BERR consultation on National Minimum Wage enforcement, fair arrears and enforcing temporary agency standards.

Currently, 95 per cent of employers caught underpaying the minimum wage simply pay back what they owe. This means there is no incentive for employers to pay the minimum wage - they can wait until they are caught breaking the law to pay up.

TUC Deputy General Secretary Frances O'Grady said: 'Government needs to come down far harder on unscrupulous employers who are consistently flouting the law and underpaying their workers. The TUC wants Government to introduce an immediate penalty of £100 per worker for all employers caught failing to pay the minimum wage.

'The TUC also believes that the maximum fine of £5,000 for minimum wage offences should be greatly increased - and that all arrears should be calculated at the current rate of the minimum wage no matter when they accrued.'

The TUC welcomes Government proposals to strengthen the enforcement regime for Employment Agency Standards (EAS) inspectors. Measures include increasing the EAS powers of access and inspection to enable them to do their jobs more effectively and allowing for offences to be tried in the Crown Court rather than the Magistrates Courts.

These measures are long overdue following a proliferation of rogue employment agencies in recent years. Exploitative practices the TUC has discovered include: making illegal deductions from pay, failing to ensure that employees' income tax and national insurance contributions are paid, denying workers statutory annual leave and holiday pay, insisting that workers put in illegally long hours, ignoring health and safety law, arranging accommodation for migrant workers that is overcrowded or unfit for human habitation, and charging migrant workers fees or bonds for their placements.

However, in its consultation, the TUC advises Government that the problem is now so acute that: employment agencies need to be licensed, the Employment Agencies Standards Inspectorate needs better resourcing, and that agency workers need better rights as well as better enforcement of existing rights.

NOTES TO EDITORS:

- Minimum wage rates:

£5.35 - Adult workers (age 22 and above)

£4.45 - 18-21 year old workers

£3.30 - 16-17 year old workers

- How the minimum wage is enforced: The minimum wage can be enforced either by complaint to HM Revenue and Customs National Minimum Wage Inspectorate or by an individual worker taking a case to an Employment Tribunal. HMRC identified £3.3 million worth of arrears last year. HMRC National Minimum Wage Helpline: 0845 6000 678 ( Monday to Friday 9am-5pm)

- Current Minimum Wage Penalties: Most employers simply pay up once they are identified. HMRC can issue an enforcement notice that requires the employer to pay the arrears within 4 weeks. (The TUC proposes the introduction of a new initial penalty of £100 for all underpaying employers). About five per cent of employers fail to pay up at this early stage. HMRC can then issue the employer with a fixed penalty notice, currently set at £224.70 per worker (42 times the minimum wage). A very small number of cases go forward for prosecution, where the maximum fine is £5,000.

- Enforcing employment agency standards: The Employment Agencies Act 1973 introduced a licensing system to try to bring rogue agencies under control. However, that part of the law was repealed in 1995. The TUC would like to see a new licensing system introduced in order to protect vulnerable workers. The Employment Agencies Standards Inspectorate employs just 12 field inspectors to protect the rights of between half a million and a million workers.

A TUC survey conducted in May 2007 found that few agency workers were aware of the EAS inspectorate's existence. Therefore they will want to know about the EAS helpline:

EAS Enquiry Line: 0845 955 5105 (Monday to Friday 9.30am-4.30pm).

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Contacts:

Media enquiries: Elly Brenchley T: 020 7467 1337; M: 07900 910624;
E: ebrenchley@tuc.org.uk

Press release (800 words) issued 8 Aug 2007