We have recently seen the first criminal prosecution under the National Minimum Wage Act 1998, resulting in the owner of a Children’s Day Nursery being fined £2,500 and ordered to pay £500 in costs.

The owner pleaded guilty to the charge of obstruction and preventing HM Revenue and Customs’ Compliance Officers from accessing staff records. HMRC was investigating whether the minimum wage had been paid to the nursery workers. HMRC commented that the decision conveyed a “clear message to employers that HMRC will actively pursue those we suspect of flouting national minimum wage law”.

The following are listed as criminal offences under the Act, each carrying a maximum fine of
£5,000 and a criminal record:

• Employer refuses or wilfully neglects to pay National Minimum Wage;
• Person fails to keep or preserve records;
• Person knowingly causes or allows false entry in records;
• Person produces or furnishes false records or information;
• Person delays or obstructs a Compliance Officer acting under the Act;
• Person refuses or neglects to answer any questions or produce documents for a
  Compliance Officer acting under the Act.

Employers must ensure that they are aware of these provisions and the potential repercussions of action being taken against them. Not only will the employer face criminal liability, but there will also be commercial implications which could be far reaching.

To avoid falling foul of the Act, employers should ensure that all of their workers are receiving at least the minimum wage, that they keep and maintain up-to date records and that they fully cooperate with any HMRC investigations and their obligations under the Act.

Employers should also be aware that the current minimum wage rates will increase on 1 October 2007 as follows:

• For workers aged 22 and over from £5.35 to £5.52 per hour;
• For workers aged between 18-21 from £4.45 to £4.60 per hour;
• For workers aged 16 or 17 from £3.30 to £3.40 per hour.

Posted: September 14th, 2007 under Employment/HR.
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