There are many changes on the horizon for employment law in 2014 as the government attempts to clear some of the red tape currently hindering business in the UK in order to make for a more productive working environment.
However, it is not just the interests of corporates that are being strengthened, as the business secretary Vince Cable recently revealed there would be a significant increase in the fine for those employers that don’t respect the worker’s right to be paid the minimum wage. Cable stated his position on the subject as “Anyone entitled to the national minimum wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crack down on those who do not play by the rules. The message is clear – if you break the law, you will face action.”
There have always been penalties in place for employers who don’t pay their workers the minimum wage but historically many people felt that they simply didn’t go far enough. A one off fine – in the maximum amount of £5,000 – plus 50% of the missing wages was previously the only deterrent to stop employers trying to avoid paying staff minimum wages.
The suggestion that the maximum fine amount be increased to £20,000, which is four times that of the current penalty, is due to be introduced this month. The penalty for the missing wages is also to be increased, boosted from 50% up to 100%.
Another significant change in this area is how the fines are going to be imposed. Whereas previously, the penalty was applied to the business on a one off basis, the plan is now that the £20,000 fine and penalty for missing wages be issued for every single underpaid worker. For those businesses that have either not made themselves aware of the minimum wage, or that are trying to get away without paying it, where these fines are imposed they are going to make a substantial impact.
In the UK, the minimum wage is currently £6.31 for those aged 21 and over, £5.03 for 18-20 year olds, £3.72 for under 18s and £2.68 for apprentices. The Chancellor of the Exchequer George Osborne recently suggested that the minimum wage should in the near future be raised to £7 an hour, which matches the level it was at before the financial crash occurred. Whilst the hope is that this will make for a much fairer and better paid UK workforce, the reality is that, with the prospect of a raised minimum wage and new penalties, there is now a significant danger to employers of being seriously penalised.
While the raise in penalties has been received with mostly universal approval, some feel that it just doesn’t go far enough. For example, Tim Farron who is the Liberal Democrat president, advocated a fine of £100,000 rather than £20,000, highlighting that fines for not paying workers the minimum wage are half that for fly tipping, a situation which he branded as ‘ludicrous.’ The effects of the minimum wage fine increases will not be fully felt for some months, but it is hoped that the raised penalties will provide serious motivation for employers to comply.