Changes to minimum wage enforcement from October 2008

The Department for Business, Enterprise and Regulatory Reform has said that changes to the regime of penalising employers that fail to comply with national minimum wage legislation will come into force on 1 October 2008.

The changes, which are being introduced through the Employment Bill, include:

  • a fairer method of calculating arrears for workers who have been underpaid;
  • a penalty payment for employers that do not pay their workers the national minimum wage;
  • new inspection powers for national minimum wage compliance officers; and
  • a strengthening of the criminal regime for national minimum wage offences.

The new regime replaces the system whereby an investigation into the alleged breach takes place (during which the employer can pay arrears); the employer is then issued with an enforcement notice (an official demand that the arrears should be paid); and a penalty notice is given if the enforcement notice is not complied with.

The changes are designed to tackle the problem of the large number of offending employers that avoid a fine by paying arrears before a penalty notice is given.

Also

National minimum wage: 'Cautious' October 2007 increases The modest 3.2% increase to the adult national minimum wage rate 1 October 2007 is in contrast to the inflation-busting increases seen over the last four years.

Employers' views on the national minimum wage: part one and part two An IRS survey finds widespread employer support for the NMW, despite evidence that it is becoming harder for employers to set minimum rates comfortably above the statutory pay floor.

National minimum wage: the basics XpertHR's employment law reference manual provides guidance on the national minimum wage.