The government has revised its naming and shaming scheme calling out businesses which fail to pay their workers the National Minimum Wage.
The changes, which will see naming rounds occur more often, are said to enhance the effectiveness of the measure as a deterrent.
The government has also increased the threshold for naming employers, meaning that firms which owe arrears of more than £500 in National Minimum Wage payments to their workforces will now be named. The threshold was previously £100.
This new approach means that some businesses falling foul of the rules by minimal sums will not be named, provided they correct any errors. Businesses that underpay by less than £100 will have the chance to correct their mistakes without being named, still have to pay back workers and can face fines of up to 200 per cent of the arrears.
The new regulations governing the scheme also widen the range of pay arrangements available to businesses employing "salaried hours workers". These are workers who receive an annual salary in equal instalments for a set number of contracted hours.
Under these changes, workers who are often paid hourly or per day consequently have different pay checks every month. As a result, businesses employing these workers are less likely to be caught out by the NMW legislation due to the differences in their hours from one month to the next.
Additionally, the government has decided that employers offering salary sacrifice and deductions schemes will no longer be subject to financial penalties if payment drops below the National Minimum Wage rate. The waiver will, however, be subject to strict criteria – including that the worker has opted into the scheme.
Deductions of NMW for uniform and other items connected with the worker’s employment will continue to be penalised.
These changes are expected to come into force on 6 April 2020, subject to normal parliamentary approval.
Iain Birrell, of Thompsons Solicitors, commented: “Shame is a powerful emotion and can be a driver for change, and being placed in the stocks on the village green remains a resonant image. However, companies don’t have emotions and research shows that you cannot really shame someone if they refuse to be shamed. The effectiveness of the naming and shaming approach is justifiably criticised.
“Thompsons is aware of no empirical evidence that it works either as intended or as claimed. This is not village green stuff – have you tried to find the list? It’s not easy, and you need to both know that it exists and care enough to look for it. Businesses are rightly concerned about reputational damage but only the most high profile employers need be concerned as they are the ones that get reported by the media. No one else is worth the ink.
“You may have heard that Wagamama failed to pay £133,212.42 to 2,630 workers but did you hear that Bridge End House Nursery failed to pay £41,938.73 to two workers? The fact that Wagamama’s staff were underpaid an average of £51 drowned out the £21,000 average underpayment to the nursery staff, despite a wholly different scale of impact on the victims. Can you name any of the other 177 employers named at the same time? Can you even remember the name of the nursery mentioned 66 words ago? Does any of that make you want to change your spending habits?
“Your reaction to those questions will tell you a lot about the effectiveness of naming and shaming because you are supposed to be the crowd, standing on that virtual village green, tomatoes in hand.”