June 2007

Further National Minimum Wage Penalties

Alistair Darling, the Trade and Industry Secretary, has announced that the government is to target employers with new fines if they pay below the National Minimum Wage (NMW).

Proposals include fixed penalty fines, linked to the number of workers underpaid, and that for the first time businesses would have to pay interest, or other payments, to underpaid workers in addition to repaying arrears. This would mean that employees would no longer be giving ‘interest free loans’ to their employers.

Alistair Darling said:

"Paying less than the minimum isn't only unfair to the workers - it's unfair to the vast majority of employers who obey the law, because it lets rogue businesses undercut them.”

The main NMW rate is currently £5.35 an hour and rises to £5.52 in October 2007.

The government has helped thousands of workers recover over £22 million in unpaid wages, but up to now, employers have not been penalised, as long as they pay the arrears when they are caught. If they refuse to pay increases or back pay, employers already face fines. Typically the penalty for underpaying one employee is more than £200 with much higher penalties being possible.

Internet link:

Press release NMW fines