National Minimum Wage: A warning to Employers

01.02.2023

Updated: 2024-01-12 07:53:30

Introduction

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Employers bear an important social responsibility for ensuring they pay their workers the national minimum wage (NMW).
Payment of the NMW is a legally enforceable right.
Employers who fail to pay the NMW not only breach the legal obligations they owe to their workers, but they are also contributing to depressing the pay of people working in their local communities.
HMRC enforcement teams deal with breaches of the National Minimum Wage Act 1998 (the 1998 Act) through criminal investigation and prosecution.
Employers that fall foul of the NMW limits will be “named and shamed”.

HMRC has a range of enforcement options at its disposal to deal with those who breach the 1998 Act.
HMRC is able to offer alternative out of court disposals when employers breach the 1998 Act and the level of culpability and harm caused is considered to be low.
However, for some employers, criminal investigation followed by prosecution before the criminal courts will by necessity be the most appropriate course of action to take when there is sufficient evidence and it is proportionate and reasonable to do so.
HMRC enforcement teams are invested with powers that enable them to conduct criminal investigations into suspected offences under the 1998 Act.
HMRC will use these powers to launch criminal investigations against appropriate suspects with a view to prosecution by the Crown Prosecution Service (CPS) when both the evidential and public interest stages of the Code for Crown Prosecutors (the Code) are satisfied. Each case will be considered on its own merits.
Section 31 of the 1998 Act makes provision for criminal proceedings to be brought for a number of offences covering a range of misconduct.

In a case of failure to pay the NMW, the amount of the alleged arrears owed to workers will not, of itself, be the deciding factor when determining if a criminal investigation should be started.
When deciding whether to prosecute cases, the CPS will specifically consider the following factors, as well as those set out in the Code for Crown Prosecutors:
- The commission of NMW offences over a long period of time will count in favour of prosecution, as it indicates a cynical exploitation of workers.
- Where the evidence indicates that NMW offences affect workers belonging to a vulnerable group of people (e.g. because they are physically or mentally disabled or are paid less than the NMW because of their vulnerable status).
- The CPS will consider bringing criminal proceedings under the Modern Slavery Act 2015 should the evidence prove that victims have been held in slavery or servitude and have been forced to provide compulsory labour. Cases falling into this category are extremely serious and those suspected of having committing offences can expect to be prosecuted.