Employers paying less than the minimum wage to be named and shamed from January 2011Wednesday, October 6th, 2010
The Low Pay Commission, in its 2009 Report, recommended that a “name and shame” policy be put in place to expose those employers who show a wilful disregard for the National Minimum Wage (NMW). The government of the time accepted that more should be done to publicise employers that try to cheat their workers and their competitors and, on 30 September, the Department for Business, Innovation and Skills (BIS) announced that such a scheme will be introduced from January 2011.
The Low Pay Commission stated that “the Government will need to give careful consideration to the criteria for who will be named, and also how the impact of naming and shaming can be maximised”. Neither the National Minimum Wage Act 1998 nor the National Minimum Wage Regulations 1999 makes specific provision for publicising the names of offending employers. There is, however, a “publicity” requirement (section 50 of the Act) for BIS to “arrange for information about this Act and regulations under it to be published by such means as appear to the Secretary of State to be most appropriate for drawing the provisions of this Act and those regulations to the attention of persons affected by them”.
It is unlikely that this requirement provides sufficient authority to publicise offenders and the necessary legislation should be expected in the new Finance Bill. A similar measure, allowing HMRC to publicise the names of serious tax defaulters on the HMRC website, was included in section 94 of the Finance Act 2009 and later brought into force from April 2010. It defines the circumstances in which names may be publicised, exactly what information may be published, how long the details can continue to be made public, and the right of offenders to make representations in advance. Names and details of offenders under those provisions are expected to be publicised during 2011.
Separately to this announcement, the Government has reviewed current NMW compliance issues in its published evidence to the Low Pay Commission. In 2009/10,
- HMRC received over 2,800 complaints, issued over 591 notices of underpayment, and identified over £4.4 million in arrears (34% above target) for over 19,000 workers (44% above target). The average arrears per worker for the year were £228, which is 18% higher than the average of £193 in the previous year.
- Workers are now entitled to be repaid arrears of the NMW at current rates and the additional element of arrears recovered for workers in 2009/10 was £94,075.
- Penalties were imposed in 480 cases amounting to nearly £162,106. Of those penalties, 236 were paid within 14 days and were therefore subject to a 50% discount. The penalty that is charged is based on total arrears for pay reference periods starting on or after 6 April 2009 (when the new enforcement regime came into effect) and HMRC therefore expects to see an increase in the penalty figures in later years.