First Criminal Prosecution for Deliberate Non-Payment of the NMW.

The owners of a Sheffield butcher's shop have been ordered to pay more than £11,000 to two former employees because they failed to pay them the National Minimum Wage (NMW). This is the fourth successful NMW prosecution to date but it is the first in which the employers have faced criminal prosecution for deliberate non-payment of the NMW.

David Jackson and his daughter Pauline Smout, owners of Jackson's Butchers in Sheffield, were prosecuted by the Revenue and Customs Prosecutions Office (RCPO). They pleaded guilty to neglecting to pay two former employees the NMW. Mr Jackson and Ms Smout had also failed to keep adequate pay records and had made false entries in the records they did keep. Mr Jackson produced these false records in an attempt to show HM Revenue & Customs (HMRC) compliance officers that they had been paying the correct amounts.

Mr Jackson was fined £700 plus costs and ordered to pay £9,065.85 in compensation to the two former employees. Ms Smout was fined £100 plus costs and ordered to pay £2,009.74 in compensation.

Andy Millican, Criminal Investigation Team Leader for HMRC said, "This prosecution sends a clear message to employers that HMRC and RCPO will actively pursue those we suspect of flouting National Minimum Wage law. If employers obstruct us and refuse to comply with the law they could receive a fine and a criminal record."

The six potential criminal offences under section 31 of the NMW Act are:

  • refusing or wilfully neglecting to pay the NMW;
  • failing to keep or preserve records;
  • knowingly causing or allowing a false entry in records;
  • producing or furnishing false records or information;
  • delaying or obstructing a compliance officer; and
  • refusing or neglecting to answer any questions or to produce documents for a compliance officer.

Each criminal offence carries a maximum £5,000 fine and a criminal record.

The Government is proposing changes to the NMW Act which it hopes will further deter non compliance and provide a fairer way of dealing with arrears of the NMW. These are being taken forward in the Employment Bill, which is currently going through Parliament. Subject to parliamentary approval, the Government intends the provisions to come into force on 6 April 2009.

Partner Note
The proposed changes will introduce:

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

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