Higher fines plus naming and shaming for underpaying employers

Employers who fail to pay their employees the National Minimum Wage now face financial penalties of up to £20,000.

The penalty was previously a fine of 50% of the total underpayments to a maximum of £5,000. It is now a fine of 100% of total underpayments to a maximum of £20,000. The new limits came into effect on 7 March.

Ministers are also planning more changes so that employers will be given penalties of up to £20,000 for each individual worker they have underpaid.

In the most serious cases, employers can also face criminal prosecution.

The changes are part of a government crackdown and follow a name and shame scheme that came into effect in October last year.

Five employers have been named and shamed since the stricter rules came into place. Between them they owed close to £7,000 to their employees.

As well as having to pay their employees what they owed, they were also fined a total of £3,381.

Business Secretary Vince Cable said: “Paying less than the minimum wage is illegal. If employers break the law they need to know that they will face tough consequences.

“We know that people are put off using a business’ service if it is found guilty of not paying its workers the minimum wage. This is a clear warning to employers: you will damage your reputation and face a stiff penalty, if you don’t pay the minimum wage.”

Please contact John Carter for more information about the issues raised in this article or any aspect of employment law.