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Minimum wage cheats - why the government is still letting them off the hook

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New rules around naming and shaming minimum wage cheats mean more bad bosses will get away with it.

This week the government announced it would resume naming and shaming employers who fail to pay the National Minimum Wage (NMW).

This is welcome news for those struggling on poverty pay, but it’s worth remembering that it was the government that suspended the practice in the first place.

Since that decision two years ago, we’ve had no idea whether the NMW has been properly enforced. That’s allowed bad bosses to pay their staff poverty wages and get away with it.

Trade unions have been campaigning hard for a return of naming and shaming as one way to help the millions of working people in the UK who don’t have enough money to make ends meet.

This week’s u-turn is a victory for that campaign, but there’s a catch. Compared with the old scheme, fewer employers will be named.

So the government will still let some minimum wage cheats off the hook.

That’s just not good enough. We won’t rest until everybody in work is paid at least the minimum wage.

How minimum wage enforcement works

Workers or trade unions with concerns about pay levels can take complaints either to an Employment Tribunal or to the HM Revenue and Customs National Minimum Wage Compliance Unit.

Whichever route they take, if the complaint is successful then employers must pay arrears back to the workers at the current minimum wage rate. This is important, because some cases involve up to six years’ worth of arrears.

But if a successful complaint is made to HMRC, two additional things should happen:

  1. HMRC imposes a “civil penalty” on the employees.
    This is double the total amount owed, up to a maximum of £20,000 per worker, with the penalty is halved for quick payment. Employers can challenge this in court if they like, but they rarely do.
  2. Employers who have received civil penalties are publicly named and shamed.

Unlike fines, civil penalties are not usually made public. The suspension of naming and shaming therefore removed an important deterrent that really influenced employer behaviour.

This is exactly why some big employers successfully lobbied against the practice in the first place, claiming that they had simply made “mistakes”.

And two years ago, the government caved in and agreed to suspend naming and shaming.

So this week’s announcement is good news?

Yes and no.

It’s good that the government has reversed its original mistake and resumed the practice of naming and shaming minimum wage cheats.

But a controversial change to the rules means the minimum arrears threshold for naming and shaming will rise from £100 to £500.

If this threshold had been in place under the old rules, it would have excluded about a quarter of cases.

Going forward, it will mean employers who deliberately try to shave relatively small amounts off minimum wage pay stay under the radar.

Think cafes and bars demanding unpaid trial shifts, or home care providers who do not pay for travel between clients, for example.

The new threshold is simply too high – ministers must think again.

Zero tolerance for minimum wage cheats

Trade unions won’t rest until everybody is paid at least the minimum wage.

And we need to be extra vigilant to ensure that the new rules don’t continue to let bad employers off the hook.

If you are concerned about any minimum wage issues, contact your union rep for advice.

You can also take a look at the TUC’s advice here , or contact HMRC here .

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