Name and shame threat for underpaying businesses

Companies which do not pay staff at least the national minimum wage will be publicly identified by the government under new proposals.

The coalition government is aiming to crack down on what it describes as ‘rouge businesses’ by alerting the public to companies not paying suitable wages.

New rules will mean that employer which fail to meet the national minimum wage (NMW) requirement will be named and shamed.

To go with the public disclosure, business will also be subject to financial penalties which already exist.

National Minimum Wage rates

Year 21 and over 18 to 20 Under 18 Apprentice
2013 (from 1 October) £6.21 £5.03 £3.72 £2.68
2012 (current rate)  £6.19 £4.98 £3.68 £2.65
2011 £6.08 £4.98 £3.68 £2.60
2010 £5.93 £4.92 £3.64 £2.50

 

Jo Swinson, employment relations minister, says that she is changing the law so that businesses know ‘tough action’ will be used to deal with underpayment.

‘This gives a clear warning to rogue employers who ignore the rules, that they will face reputational consequences as well as a fine if they don’t pay the minimum wage.’

Under present conditions, employers had to meet one of seven criteria before they could be named. This included the amount of NMW owed to workers being above £2000 and an average per worker of £500.

Now no benchmarks will have to be met before a public naming and shaming by David Cameron’s government.

Zeeshan Hussein, employment lawyer and partner at Colemans-ctts Solicitors, comments, ‘The risk of potential reputational damage alongside financial costs is a serious consequence that can tarnish a business’s potential or existing market strength.

Between 2012 and 2013, HMRC found 736 employers who were failing to pay the NMW and then set about recovering the £3.9 million which was due to 26,500 workers.

The new regulation is set to come into force in October of this year, and staff who believe they are not getting paid enough are encouraged to contact a free and confidential Pay and Work Rights Helpline to refer cases to HMRC.

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for GrowthBusiness.co.uk from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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