Tax officials are much more likely to probe hospitality businesses to ensure they are paying the national minimum wage (NMW), after the number of investigations by HM Revenue & Customs (HMRC) shot up.
Peter Davies (pictured), senior manager at accounting and advisory firm Vantis, warned leading industry figures that more investigations had taken place in the first four months of this year than in the whole of last year.
The warning comes ahead of another hike in the minimum wage, due in October this year.
Speaking at the company's annual hospitality and leisure seminar, Davies said: "One of HMRC's key area of investigation concerns whether a business is illegally making up the NMW by including tips within their calculations."
"The onus is on the employer to disprove any claim brought before a tribunal and the only way to successfully fight such a claim is by keeping accurate records of exactly what every employee is paid."
If an employer loses a case at a tribunal, they will have to reimburse the employee at today's rates and pay a premium, as well as being fined up to 50% of what the employee is owed.
The NMW Compliance Strategy published by the Department for Business, Innovation & Skills indicates that around 60% of cases investigated come directly from disgruntled workers and former workers who claim they have been underpaid.
In cases where an employee has complained, HMRC check compliance across the employer's whole workforce, meaning that many workers in a company can receive arrears as a result of just one worker's complaint.
Also investigated are third-party complaints including those from businesses who fear a rival is undercutting them by illegally paying low wages.
In the financial year 2008/09 nearly £4.5m of arrears for over 23,000 workers - over £580,000 more than the previous year - was identified across all industries.
Following the introduction of a new, tougher enforcement scheme in April 2009, underpaid workers have received an additional £76,000 and employers have been charged a total of just over £100,000 in penalties.
MINIMUM WAGE RISES
From 1 October 2010 the rate of the NMW will increase from £5.80 for 22-year-olds and over to £5.93 for 21-year-olds and over.
The rate for 18- to 21-year-olds will rise from £4.83 to £4.92 for 18- to 20-years old, while the under-18s rate will increase from £3.57 to £3.64.
By Janet Harmer
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