We have just seen the first successful prosecution of an employer under the National Minimum Wage legislation. That’s one prosecution in nearly 10 years. But wait, it gets worse. The owner of Rascals Day Nursery in Walthamstow was fined just £2,500 for her deliberate non-cooperation with investigators. Miserable though this penalty may seem, the maximum fine employers can face is just £5,000. In practice, it is ludicrously easy for employers to avoid any prosection at all. 95 per cent of employers caught underpaying the minimum wage simply pay back what they owe to avoid any further penalty. If they fail to do this within a 4 week period, they can be landed with a fixed penalty notice (about £225 per worker).
If the government seems inept at flushing out those employers who pay starvation wages, it is because the resources devoted to finding them are totally inadequate. Earlier this year the government announced proudly that the budget to enforce minimum wage laws was to increase by 50%. Unfortunately this was just an increase from £6m to £9m – scarcely enough to cover the office furnishings of some government departments. I read that the government is doing a mail out to hotel employers this month, informing them about minimum wage rules and things they need to be doing. After a short ‘bedding in’ period this will be followed up by spot checks from enfocrement officers. I just have one question : isn’t ten years a long enough bedding in period for employers to comply with the law ?