It's pay-back time for the rogue bosses who rip off their workers

The National Minimum Wage (NMW) is a key element to ensuring that workers are being paid fairly. In the last ten years, the British workplace has become a very different place, with many new safeguards to protect employees and business itself.

People at work in Britain have benefited from the right to a minimum wage, paid holidays, rest breaks, time off for family emergencies, a cap on the working week and measures to support working parents. Part-time workers now have the same rights as their full-time colleagues.

The government wants to ensure that employees’ rights are protected, that employers understand and abide by their responsibilities within a system which offers flexibility and fairness. The upcoming Employment Bill aims to increase protection for vulnerable workers and lighten the load for law-abiding businesses.

The Bill would toughen up penalties for employers who do not pay the NMW, introduce spot fines and payment of fair arrears to workers who have been underpaid. This would help level the playing field so businesses doing the right thing are not undercut by a minority of employers who break the rules and potentially exploit vulnerable workers.

The NMW has reduced the extent of low pay in the UK and has helped close the gender pay gap at the bottom of the earnings distribution. Around one million workers benefit from the annual increase to the NMW.

The NMW has become an accepted feature of the labour market and is supported by the majority of employers. The government is determined to crack down on the minority of employers that do the wrong thing. The Bill aims to toughen up penalties and allow people who have been underpaid to be eligible to claim arrears. Between 2003 and 2006 there were 15,000 investigations and underpayments totalling £9.6m were identified.

Although much effort has been made to ensure that workers who are underpaid are repaid what they are owed, the best protection we can offer is to strive to ensure people are not underpaid in the first place.

In order to take this further the government consulted over the summer on proposals for a new penalty for underpayment of the NMW as well as a fairer way of calculating arrears so that workers do not lose out in real terms as a result of underpayment.

These proposals, coupled with the increase in the enforcement budget by £2.9m, underline the government’s commitment to seeing the fairest outcome for workers who have been underpaid.

Parliamentary Brief Research Department.