New fines for minimum wage dodgers

Employers refusing to pay the minimum wage could be fined £224.70 for every worker they have underpaid as part of a government crackdown on those flouting the law.

New proposals supporting the crackdown announced today by Alistair Darling, trade and Industry secretary, will come into effect in February.

In the past employers could have been fined up to £5,000 for flouting the law, but there was no provision to fine them per underpaid employee. The crackdown will also see employers having to pay back arrears in a shorter period of time of seven days as opposed to 28.

In his pre-budget report in December, chancellor Gordon Brown flagged up a need to increase the penalties for employers who are paying staff under the minimum wage. He said that more public funds would be made available to monitor companies and enforce the rules on the national minimum wage. Her Majesty’s Revenue and Customs (HMRC) enforces the national minimum wage on behalf of the government and investigates employers who are reportedly paying below the band.

The national minimum wage rose from £5.05 an hour to £5.35 an hour in October 2006.

Darling said: "Workers have the right to a decent minimum wage and we are determined they get it. To those employers avoiding the minimum wage the message is don’t pay it and you’ll pay the fine. In the last year alone the government’s enforcement teams across the UK helped over 25,000 workers get more than £3m back in unpaid wages. The vast majority of good employers need to know they are operating on a level playing field. These measures will help deliver that."

Under the new rules, if†a complaint is upheld and the employer refuses to pay the money owed he is given a warning to do so within seven days. Those who do not pay within that period risk paying a fine. The new tougher line is likely to lead to increasing numbers of penalty notices being issued by the HMRC.