In the year 2005/06, the Government recovered over £3.2 million on behalf of over 25,000 workers who had been paid less than the minimum wage by their employers. Under the current system, unscrupulous employers are only penalised if they fail to comply with an enforcement notice issued by HM Revenue and Customs (HMRC). The worker is entitled to arrears based on the difference between the remuneration they received and the national minimum wage rate which applied at the time.
The Low Pay Commission has expressed its concern that even when arrears are paid to workers, they can still be worse off in real terms. The Government is keen to introduce a more effective penalty regime to deter non-compliance and has issued a consultation to this end. The options put forward are to:
1. Make no change to the current system for reimbursing arrears; or
2. Pay interest on any arrears; or
3. Charge all arrears at the current national minimum wage rate; or
4. Calculate arrears in the present way then apply an uplift payable by the employer.
The consultation closes on 8 August 2007 and can be found at http://www.dti.gov.uk/files/file39439.pdf.
The Government has announced the increases in the national minimum wage rates which will apply from October 2007.
The adult national minimum wage will rise from £5.35 to £5.52 an hour. The minimum rate for 18- to 21-year-olds will increase from £4.45 to £4.60 an hour and for 16- to 17-year-olds the rate will be £3.40 an hour instead of £3.30.
The next sector targeted for special attention by HMRC compliance units will be hotels, widening out next year to other areas of the hospitality industry.
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