MINIMUM WAGE DODGERS TO BE PUBLICLY NAMED AND SHAMED UNDER NEW RULES ACTIVATED THIS MONTH

From now on, employers who fail to pay their interns the national minimum wage (NMW) will be publicly named and shamed, under revamped plans to clamp down on rogue businesses caught exploiting their young workers. One national newspaper journalist has told Graduate Fog that the change is a “very significant” development that will make it far easier to report on specific cases.

In August it was announced that from October 2013 current restrictions on naming guilty parties will be lifted, enabling journalists and campaigners to publicise the names of employers who have been penalised for failing to pay their interns the wages they deserve. As the change begins to kick in, Guardian reporter Shiv Malik – who regularly reports on internships and other NMW-abuse scandals – told Graduate Fog today:

“This change is very significant for journalists interested in minimum wage enforcement, for interns and other vulnerable workers. Until now, we have only found out who has been fined and prosecuted if the intern happened to contact us directly, or via campaign groups like Graduate Fog and Intern Aware. From this month, this information is going to be more easily accessible.

“Clearly, the responsibility should rest with government and the Department of Business to name bad employers, and not with vulnerable interns who have been valiantly trying for years to find a way to make their own case public.”

The new rules are part of the government’s attempts to beef up enforcement of the minimum wage law and ensure that all employer pay their workers the wages they deserve.

By naming employers it is hoped that bad publicity will be an additional deterrent to employers who could otherwise be tempted to pay less than the minimum wage (either expenses only, or nothing at all). This is on top of financial penalties which employers already face if they fail to pay NMW, although mostly these are the enforcement of back-pay pay-outs, rather than punitive fines for breaking the law.

Under the original scheme, employers had to meet one of seven criteria before they could be named. These were: 

1. There is evidence that the employer knowingly or deliberately failed to comply with their NMW obligations.
2. There is evidence that the employer has previously received advice from HMRC about the steps they need to take to ensure future compliance with national minimum wage and has not taken those steps.
3. There is evidence that the employer has failed to take adequate steps to keep or preserve NMW records.
4. There is evidence that the employer has delayed or obstructed a NMW compliance officer in the performance of their duties.
5. There is evidence that the employer has refused or neglected to answer questions put to them by a NMW compliance officer.
6. There is evidence that the employer has refused or neglected to provide information or produce documents to a NMW compliance officer.
7. There is evidence that the employer refused or neglected to pay arrears of the NMW to workers, following HMRC intervention, which has resulted in HMRC taking action against the employer to ensure payment of arrears to workers.

The revised scheme will remove these restrictions so that any employer who breaks minimum wage law can be named.  It will also name employers that have been issued with a Notice of Underpayment (NoU) by HMRC. This notice sets out the owed wages to be paid by the employer, together with the penalty for not complying with minimum wage law.

In 2012/13 HMRC identified 736 employers who had failed to pay the National Minimum Wage leading to the recovery of £3.9m in unpaid wages for over 26,500 workers.

Employment Relations Minister Jo Swinson said:

“Paying less than the minimum wage is illegal. If employers break this law they need to know that we will take tough action.

“This is why I’m making changes so it is easier to name and shame employers who break the law. This gives a clear warning to rogue employers who ignore the rules, that they will face reputational consequences as well as a fine if they don’t pay the minimum wage.”

Graduate Fog welcomes this development. For some time HMRC has had a misplaced loyalty towards employers exploiting their young workers. The priority of the whole system seems to have been keeping these employers’ details anonymous rather than protecting the workers themselves. We remain concerned that the system still relies too heavily on vulnerable ex-interns reporting the employers who exploited them (rather than third parties being able to do this on their behalf), but it is a step in the right direction. Hopefully this new development will make employers think twice before taking advantage of vulnerable young jobseekers so desperate for experience that they will agree to work for less than the minimum wage. Indirectly, it will also help those who cannot afford to work for free, as employers will realise that they are legally obliged to pay a fair wage.

*IS IT RIGHT THAT INTERN EXPLOITERS SHOULD BE NAMED AND SHAMED?
Will the fear of bad publicity be enough to make companies re-think taking advantage of their interns? Is this change a step in the right direction – or is a system that relies on interns reporting their former employers still fatally flawed?