Companies failing to pay their workers the National Minimum Wage are set to be hit by bigger fines. The Government wants to increase the penalty fourfold up to £20,000. This comes as the issue of low pay in the UK increasingly comes to the fore.
The Government wants to further increase the punishment “at the earliest opportunity” by making the fine applicable per employee, rather than per employer. Previously the maximum fine was £5,000 so Business Secretary Vince Cable is “bringing in tougher financial penalties to crack down on those who do not pay by the rules.”
This comes amidst a problem of wages falling in real terms for the last five years, the deepest and most sustained drop since reliable records began. Although, the situation is expected to improve this year with news of inflation slowing to 2% in December. For now though, the effects of this will be little felt for some time.
During the opposition day debate in the Commons today, Labour will call for more companies to bring in a living wage rather than toeing the line with the minimum. They will also call for even bigger fines for businesses not paying what they should and that councils should be given enforcement powers along with HMRC.
With Labour previously calling for a tenfold increase in fines and Cable’s request to the Low Pay Commission – who will be recommending this years minimum wage – to raise the National Minimum Wage above inflation for several years, the issue is not disappearing any time soon.