Important provisions relating to the enforcement of
the NMW are contained in the Employment Relations
Act 2004, which inserts additional sections into the
National Minimum Wage Act 1998. These provisions
which are now in force are as follows:
1 Information supplied by worker and employer. The
NMWA 1998 carried provisions relating to the supply
and use of information obtained by enforcement
officers. In general terms this information could not be
supplied to any other person or body and even when
this was allowed the Secretary of State had to authorise
it. It was felt that, because of these restrictions, enforce-
ment officers were unable to inform the worker what the
employer’s records revealed about the worker’s claim.
Similarly, the officers were unable to inform the employer
about the ingredients of the worker’s case. Section 16A
enables an enforcement officer to disclose information
obtained from the employer to the worker where it relates
to his or her case and similarly to disclose information
obtained from the worker to the employer.
2 Withdrawal and replacement of enforcement and
penalty notices.Sections 22A–22F modify the former
procedure (whereby following issue of an enforcement
or penalty notice any change could come about as a
result of an appeal to an employment tribunal) by the
introduction of provisions under which enforcement
officers may withdraw and replace enforcement notices.
Similar provisions apply to the withdrawal and replace-
ment by officers of penalty notices. An ultimate right of
appeal still lies to an employment tribunal.
3 Penalties. Organisations that refuse to pay the NMW
face fines of twice the NMW, a day for each employee
(s 21). If defiance continues, the fine goes up to a max-
imum of £5,000 for each offence (s 31). Workers have the
right to recover the difference between what they have
been paid and the NMW before a tribunal as an unlaw-
ful deduction from wages (s 17). There is no limit of
time on back claims.
As well as individuals bringing claims, HMRC officers
have power to issue enforcement notices if they find
underpayment. If the notice is not complied with, an
officer can sue in an employment tribunal to recover
what is due on behalf of the worker. In this connection,
mention should be made of the National Minimum
Wage (Enforcement Notices) Act 2003.
This Act ensures that HMRC can issue enforcement
notices to require the payment of the NMW to former
employees as well as current employees. The Act closes a
loophole that was revealed by the decision of the EAT in
IRCv Bebb Travel plc(2002). In the Bebbcase the EAT
ruled that under s 19(2) of the NMWA 1998 an enforce-
ment notice could be issued in regard to a previous
failure to pay the NMW if the notice also contained a
requirement that the employer pay the NMW in the
future. Thus, former employees could not claim merely
for past failures to pay. The 2003 Act adds s 19(2A) to
the 1998 Act which allows the service of an enforcement
notice where it is of opinion that a worker who qualifies
has ‘at any time’ not received the minimum wage. The
2003 Act is retrospective. Workers may bring claims
under it to an employment tribunal, a county court or
through HMRC’s enforcement unit.
4 Action by employees. A worker who is dismissed for
asking for the NMW can claim unfair dismissal. In Butt
v Euro Fashion (MCLR) Ltd(ET Case No 240341499) B
was paid £2.60 per hour. He asked for £3.60 (the then
rate) and was told to get another job if he wanted the
NMW. He resigned and subsequently a tribunal held
that he had been constructively dismissed and that the
dismissal was unfair.
5 Records.The record-keeping obligations were eased
following consultation and it is now merely provided
that an employer has to keep records ‘sufficient to estab-
lish that he is remunerating the worker at a rate at least
equal to the national minimum wage’. The records may
be in a format and with a content of the employer’s
choosing and must be capable of being produced as a
single document when requested either by an employee
or HMRC. BERR has published guidance on the kinds
of records that will be regarded as sufficient.
Records can be kept on a computer, but the employer
must be able to produce them in a single document,
which can be of any length, on request.
6 Access to tax records.A government amendment
made to the Employment Relations Act 1999 allows in-
formation obtained by a tax inspector to be supplied:
■by HMRC to BERR for any purpose relating to the
National Minimum Wage Act 1998; and
■by BERR with the authority of HMRC to inspectors
required to enforce the NMW or minimum agricul-
tural wages.
7 Corporate offences.Where a relevant offence is com-
mitted by a company, its directors and other officers are
jointly responsible with the company where they have
consented to or connived at the offence or been neglect-
ful in regard to it (s 32).Part 4Business resources