Tougher Penalties for Minimum Wage Cheats

The Employment Act 2008 contains measures to toughen up penalties for those who break National Minimum Wage (NMW) laws. The maximum penalty for underpayment of the NMW will be increased from a £5,000 fine to an unlimited fine with the most serious cases of non-compliance tried in the Crown Court.

The Act will also:

  • introduce a fairer method for dealing with the way NMW arrears are calculated, so that workers do not lose out as a result of being underpaid. The formula for this calculation is set out in the Act and the provision ensures that the calculation of arrears takes into account the length of time that arrears have been outstanding. The new method of calculating arrears will apply to any arrears of the NMW that are outstanding on or after the date the Act comes into force, so will include arrears resulting from underpayments of the NMW made before that date;
  • allow those enforcing the NMW and Employment Agency Standards to share information; and
  • give further powers to HM Revenue and Customs officers to obtain NMW information from employers, allowing them to take information away from the employer’s premises in order to copy it.

In addition, the maximum penalty for Employment Agency Offences will be increased and the investigative powers of the Employment Agency Standards Inspectorate will be strengthened, allowing them greater scope to access financial information in order to check whether a worker’s complaint is an isolated instance or an example of widespread abuse.

The Government intends the NMW provisions to come into force on 6 April 2009. For further information on the Employment Act 2008, see http://www.berr.gov.uk/whatwedo/employment/employment-legislation/employment-bill/index.html.

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