Ministers urged to get tough on minimum wage offenders

Ministers have been urged to impose tougher penalties on companies that pay their staff below the minimum wage after it emerged that the government fined companies only £14m in a year when rogue employers underpaid their staff by £15.6m.

It is a criminal offence not to pay the minimum wage, and the maximum fine is 200% of every penny underpaid. Firms found in breach must also repay staff all the money they are owed.

More than 200,000 people were underpaid a total of £15.6m in the 2017-18 financial year, according to figures released by HM Revenue and Customs, as part of what the government called an “unprecedented” crackdown on rogue employers.

However, the taxman collected fines totalling only £14m from firms found to have breached their legal obligation, triggering calls for greater action from the state to punish offenders.

Rebecca Long-Bailey, the shadow business secretary, said: “The Tories continue to not do enough to stop employers denying workers their rightful pay, which is grossly unfair to workers but also unfair to the employers who play by the rules.

“It is shocking that some employers are still skirting around the law by not paying their workers the full national minimum wage. This should be a red line for any government.”

Workers are facing the biggest squeeze on wages since the end of the Napoleonic wars, with pay growth sluggish since the financial crisis and inflation high after the Brexit vote two years ago. More than two million people in Britain are paid the national minimum wage, which is currently £7.83 per hour for workers over the age of 25.

Odeon cinemas, Home Bargains and Card Factory are included among the firms that have been named and shamed for failing to pay the national minimum, while Sports Direct and its employment agencies were exposed last year for underpaying staff by almost £1m.

Although the latest figures suggest HMRC failed to use the full power of the law in the 2017-18 financial year, some cases did not incur penalties because they were self-corrected. Some fines may also have stemmed from enforcement cases opened prior to the introduction of the maximum penalty in 2016.

Campaigners say too little is being done, however. This month the IPPR commission on economic justice – backed by the archbishop of Canterbury, Justin Welby, and senior business leaders – urged ministers to increase the penalties for companies that failed to pay the minimum wage.

Carys Roberts, the senior economist at the IPPR, said: “To be a serious deterrent, the punishments for flouting the law must get tougher. Let’s see these companies fined properly, using the full weight of the law, and named and shamed in public.”

Lucie Russell, director of the Fair by Design campaign at the charity Barrow Cadbury Trust, said: “It’s not good enough for employers to blush and say sorry after recompensing workers; they should always pay a fair wage for a fair day’s work.”

The Low Pay Commission, established under Tony Blair’s Labour government to oversee the introduction of the minimum wage, estimates that as many as 580,000 workers across the country are underpaid. Including unpaid overtime, the figure would rise to as much as two million, or almost a tenth of the workforce over the age of 25.

George Osborne, the former chancellor, raised and renamed the minimum wage as the “national living wage” two years ago, although charities say it does not in fact meet such a definition. The Living Wage Foundation calculates that the pay required to cover basic needs is £10.20 per hour in London and £8.75 in the rest of the UK.

The business minister Kelly Tolhurst said: “We are dedicated to stopping underpayment of the minimum wage. Employers must recognise their responsibilities and pay their workers the money they are entitled to.”