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Naming and shaming minimum wage offenders
Thursday, January 13th, 2011
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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). On 30 September 2010, the Department for Business, Innovation and Skills (BIS) announced that such a scheme would be introduced from January 2011.
On 11 January 2011, BIS published a booklet entitled Policy on HM Revenue & Customs enforcement, prosecutions and naming employers who flout national minimum wage law. The booklet gives a detailed explanation of the policies and practices of BIS and HMRC in enforcing the rights of employees under the NMW and undertaking criminal prosecutions.
Following an investigation into a breach of NMW rules, HMRC may issue a Notice of Underpayment, if appropriate, giving details of the arrears that must be paid to the affected employees and the penalty for non-compliance. If any or all of the Notice is ignored by the employer, further steps are taken in the courts or employment tribunals. This further action establishes a debt that is enforceable in law and various ways of enforcing payment can by pursued through the courts.
The “naming and shaming” scheme was introduced from 1 January 2011. The objective is to raise awareness of NMW enforcement and deter employers who would otherwise be tempted to flout NMW law. The reasoning is that
- some employers are more likely to respond to the social and economic sanctions that may flow from details of their payment practices being made public, than from financial deterrents.
- the public and businesses, including workers, prospective workers, and law-abiding employers, will have access to information which will enable them to make informed choices about whom they work for (in the case of workers) and whom they do business with (in the case of employers).
- raising awareness of NMW enforcement in this way could also encourage more workers who have been underpaid to come forward.
The criteria for naming are not the same as the criteria for prosecutions. Employers will not be named under the scheme while prosecution is being considered or is under way. Where a potential prosecution case is rejected by the Crown Prosecution Service (CPS), the employer will still be named if he meets the criteria for naming. Those who are prosecuted will also be named.
HMRC will refer cases to BIS if the total arrears owed to workers are at least £2,000, if the average arrears per worker are at least £500, and one or more of the following criteria appear to be met:
- there is evidence that the employer knowingly or deliberately failed to comply with its NMW obligations
- there is evidence that the employer has previously received advice from HMRC about the steps to take to ensure future compliance with national minimum wage 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 NMW compliance officers in the performance of their duties
- there is evidence that the employer has refused or neglected to answer questions asked 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, which has resulted in HMRC taking action against the employer to ensure payment.
HMRC will only refer cases to BIS under the naming scheme where a Notice of Underpayment has been issued to the employer requiring the payment of arrears of the NMW to one or more workers or former workers. Employers will not be named under the scheme where they have appealed the Notice of Underpayment and their appeal has not been withdrawn or dismissed. Where an employer’s appeal against a Notice of Underpayment is partially accepted, but the criteria (including the financial criteria) are still met, the employer may still be named.
If, having reviewed the evidence, BIS decides that the employer should be named, despite any representations made by the employer, the employer will be named in a press notice. However, BIS will not maintain a public register of employers who have failed to pay the NMW or who have been named.
Further information:
