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Deluge of Complaints on Minimum Wage Abuse
July 2007
Revenue and Customs has conducted nearly 45,000 investigations into employers paying less than the minimum wage since the legislation was introduced in 1999 – but has started only one criminal prosecution to date.
The department has received 19,000 complaints from the public about abuses of the legislation, a parliamentary answer revealed last week.
After a surge of complaints following the introduction of the minimum-wage legislation by Labour in 1999 – there were 4,682 in 1999 – the number has settled down to about 2,000 a year, the figures provided to parliament show.
The legislation gave Revenue & Customs powers to bring criminal proceedings against offenders.
The first such prosecution, against a children’s nursery, is expected to be heard at Waltham Forest magistrates court this summer. Several other prosecutions are expected to follow.
Revenue and Customs said it had deliberately chosen not to pursue criminal prosecutions because its other powers – it can issue enforcement notices and penalty notices against wayward employers – were deemed sufficient.
“The government has been contents for compliance officers to rely on the use of civil powers to date” a department spokeswoman said. “It is clear that these have very largely proved sufficient and that the great majority of employers agree to pay arrears without the need for an enforcement notice.”
There is a small majority of employers that are persistently con-compliant and refusing to co-operate with compliance officers. For this reason, we are now taking forward a small number of minimum-wage criminal investigations. If this initiative proves successful then it may be widened in future years” she added.
The department’s enforcement measures had been a success, with more than £22m in wage arrears having been identified since 1999, she said.
Revenue and Customs has 16 teams of minimum-wage investigators based around the UK.
Last week’s figures showed that Revenue & Customs had conducted more than twice as many investigations of employers than there were complaints. The number of investigations totaled more than 44,000 since 1999.
While Revenue & Customs enforces the minimum wage, policy is set by the Department of Trade & Industry.
There are three levels of minimum wage in the UK. Workers who are aged over 22 must receive £5.35 an hour, those between 18 and 21, £4.45 per hour, and those under 18, £3.30 an hour.
The issue has returned to the spotlight in recent weeks because of repeated reports of migrant workers being paid less than the minimum, or having allowances deducted from their pay, that take them below the low-pay threshold.
Lord Hylton, the peer who asked the question, said there was “a certain amount of evidence that migrant workers are being exploited”
“These figures show that there is a substantial problem” he said.
Tony Woodley, general secretary of the TGWU union, said, “The minimum wage has been a big step forward in tackling poverty pay. However, working people will only secure the benefits if there is proper enforcement.”
“It is common knowledge that there are all too many employers who will take advantage of the flexible-labour market to try and avoid paying the minimum wage. The lack of prosecutions suggests that they are getting away with it”
The original legislation provided for six criminal offences, ranging from a willful refusal to pay the minimum wage to obstructing a compliance officer. All carry a maximum fine of £5,000.
Under the enforcement and penalty-notice regime, employers can appeal against Revenue & Customs findings before employment tribunals.
One of the most high-profile minimum-wage cases was settled earlier this year after Butlins workers received more than £1m in back pay.
Although they were receiving more than the minimum wage, a deduction by their employer to pay for electricity if they lived on the site took them below the threshold.
The case started at an employment tribunal, then went to an appeals tribunal and was finally decided at the Court of Appeal.
Source: Daily Telegraph July 2007
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