Regulatory enforcement of the minimum wage

By Jessica Smeaton

Earlier this month, the government named and shamed 25 employers who failed to pay their workers the national minimum wage (NMW). Under rules that came into force in October 2013, previous restrictions on identifying employers who flout NMW law have been stripped back, making it easier for the government to publicise those who have been issued with a notice of underpayment.

There is no denying that there is a problem with enforcement of the NMW. In August 2013, when announcing the change in rules the Department for Business, Innovation & Skills (BIS) stated that HMRC had identified 736 employers in 2012–13 who had failed to pay the NMW, leading to the recovery of £3.9m in unpaid wages for more than 26,500 workers.

But it is not all ‘rogue’ employers; enforcement action can result from simple maladministration. Unfortunately for well-meaning but sloppy employers, that won’t normally save them. According to HMRC policy, the reasons for the underpayment will not be taken into account when determining whether or not to issue a notice of underpayment, even if the underpayment was accidental…

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