Clause 11

Part of Employment Bill [Lords] – in a Public Bill Committee am 12:45 pm ar 14 Hydref 2008.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General 12:45, 14 Hydref 2008

We only have a few minutes, but I will make a start. There are some important principles in relation to this clause. My main issue is to address whether these provisions dealing with the level of penalty and mode of trial are going to fulfil their objective of improving payment of the national minimum wage. The underpayment of the national minimum wage is poor practice. It has a negative impact on both employers and compliant companies, with the former being underpaid and the latter being undercut. Further, those businesses that are undercut are often small local businesses which bear the resulting burden of unfair competition heavily. For this reason, we welcome the Government’s proposal to address the issue of enforcement of the minimum wage, which comes on the back of recommendations of the Low Pay Commission’s report. However, I have recently had the opportunity to review that report and I was surprised to read the figures that it recorded for enforcement actions taken by HMRC. In the period of 2006-07, it identified some 1,523 cases of non-compliance but issued only 71 enforcement notices and two penalty notices. The total value of underpayments was identified at some £3 million, with the average arrears per worker being £214, as against a figure of only £130 for the previous year.

The Committee is no doubt aware that under the National Minimum Wage Act, provision is made for criminal prosecution under six offences that relate to the payment of the minimum wage, the maximum penalty for which is £5,000. Those were not used for nine years until 2007 when two prosecutions were successfully made. One of them, a director of a day nursery, was fined £2,500 and ordered to pay costs of £500 for the offence of obstruction under section 31(5)(a) of the Act. More recently, there have been two further prosecutions, most notably, the case of a Sheffield butcher’s shop, which was fined £800 plus costs and ordered to pay more than £11,000 in compensation to two previous employees. The payment of that fine was due by 1 October. I would be interested to hear from the Minister whether it has been paid. My point is that we must not wonder why we are being asked to give HMRC more powers when those that it currently has are being used so sparsely.