Combined Agency Could Toughen Penalties for Companies Breaching NMW

In light of the BEIS consultation on merging agencies to create a single body to enforce employment rights, Richard Maitland, Partner and specialist in Human Capital at MHA MacIntyre Hudson, says uniting policing responsibilities could mean a more hard-line approach to companies breaching the National Minimum Wage (NMW) by mistake.National

At present, responsibility for enforcing the rights of “vulnerable workers” is spread across different bodies, often answering to different government departments. BEIS has big ambitions for a potential new enforcement body, which would draw together responsibility for enforcement of a range of regulations protecting vulnerable workers. One likely consequence of this is a stiffening of the government’s resolve to clamp down on breaches of the NMW.

The spectrum of labour law violation ranges from immoral practices that lead to tragedies such as Morecambe Bay, all the way to companies which do not set out to deliberately underpay their workers, but inadvertently fail to meet their NMW obligations. HMRC already takes quite a hard-line approach on technical but unintentional breaches of NMW rules, but a new combined agency could be tougher still. Some of the moral resolve the government brings to tackling deliberate exploitation of vulnerable workers may trickle into a more rigorous approach to unintentional breaches of the NMW.

BEIS do acknowledge, in principle, that there is a spectrum of offences against NMW and other regulations, with some purely accidental breaches, and promise a proportionate response accordingly. Our experience of HMRC’s current enforcement of the NMW suggests Whitehall recognises the need for proportionality more clearly in principle than in practice.

If approved, the joint agency should give further warning to companies to understand all the ways they could breach the NMW without realising it. This happens more regularly than companies realise, for example when an employer schedules a mandatory pre-shift briefing 10 minutes before usual starting hours. This may seem a minor issue but counts as working time and will add up to a considerable underpayment of workers on the NMW. HMRC can currently review a company’s practices over a period of six years and exact penalties worth 200% of the underpayment. A new, joint agency is likely to pursue this course of action more frequently and robustly.

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