Good employers should not be disadvantaged by those who persistently fail to pay the national minimum wage, says Employment Relations Minister Jim Fitzpatrick. He outlines how the Government's new penalties policy is targeting non-compliers.
Our drive to ensure workers receive a decent minimum wage has made a real difference to the lives of thousands of workers in the hospitality sector.
Sustained year-on-year rises in the minimum wage have protected some of society's most vulnerable people from exploitative rates of pay - the most recent increase on 1 October 2006 alone benefited 1.3 million workers.
Despite predictions to the contrary, the national minimum wage has not affected the job prospects of low-paid workers in the UK and businesses are actually benefiting from a more satisfied workforce. Employers have found they are able to attract and retain staff more successfully, which can in turn contribute to a more productive workplace.
The challenge now is to ensure that all employees are receiving the minimum wage to which they are entitled.
The majority of employers in the hospitality sector are scrupulous and pay the correct level. But they need to know that they are operating on a level playing field and are not being put at a competitive disadvantage by those who underpay their workers.
This is why we are determined to crack down on bosses who persistently avoid paying the minimum wage with the introduction of a new penalties policy.
The minimum penalty an employer now faces for not paying back the arrears owed when asked is £224.70 for one worker. The worst-offending employers face prosecution, resulting in fines of up to £5,000 and a criminal record.
Furthermore, the Chancellor announced in his pre-Budget report that the Government will increase the resources devoted to national minimum wage enforcement by 50% from April 2007.
The total amount recovered from employers since the introduction of the minimum wage in April 1999 is now in excess of £22m.
In cases where workers complain they are not getting the minimum wage, HM Revenue and Customs (HMRC) investigate the employer. If the complaint is upheld and the employer refuses to pay, he is a given a warning to repay the arrears within seven days. Those who do not comply in full face a fine and court action to recover the money on behalf of the worker.
To help employers comply with the law and ensure that workers are aware of their rights, publicise changes to the national minimum wage rate in a variety of different languages and provide guidance to employers and employees via the national minimum wage helpline and a number of Government websites.
Between 2005 and 2006, more than 61,000 calls were made to the national minimum wage helpline, when the Government helped 25,314 workers recover more than £3.2m in unpaid wages.
Over the past two years we have also successfully targeted traditionally low-paid sectors with tailored publicity and advice followed by a period of focussed enforcement and compliance visits from officers.
The hairdressing sector was targeted in 2005, when 629 cases were registered and arrears of around £380,000 were identified for 491 workers.
This year we have been working with the childcare sector and we shall announce the next sector to be targeted this spring. This is most likely to be a sector involving migrant workers. In the meantime, HMRC will continue to use data from the Home Office's Workers Registration Scheme to select a number of migrant sector cases for a compliance visit.
Enforcement of the national minimum wage supports both workers and good employers and makes the UK economy a fair place to do business.
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The National Minimum Wage helpline number is 0845 6000 678