One of the tasks entrusted to HM Revenue & Customs is enforcement of the minimum wage. Unfortunately they don't do it well. As the Guardian reports:
The coalition's record on low pay has come under attack as new figures revealed that not a single company has been prosecuted in the past year for paying less than the national minimum wage. Despite ministers' claims that the government is getting tough on under-payers, the last successful criminal prosecution was in February 2013.
That was one of only two prosecutions during the government's entire term of office to date, according to figures given to parliament. The cases involved the imposition of fines to the value of £3,696 on an opticians in Manchester and £1,000 on a security company in London.
Now don't get me wrong: I am well aware that action to enforce the minimum wage does not always involve prosecution and that orders to enforce wages and make back payments are made. I also know that because of strenuous efforts made by MPs, campaigners and unions plans to cut the budget of this unit were abandoned, but all that being said prosecution plays a role in law enforcement and this unit is not delivering.
I very strongly suspect that this is because of budget cuts that are undermining all of HMRC's work and which punish the least well off in our society the hardest. Justice denied to those who are not even paid the minimum wage is very harsh justice indeed, and I think it is a major failing on HMRC's part that it is not making prosecution of those abusing in this way a priority. If HMRC's job is to uphold society - and that is a key role for any tax agency - then publicly failing to indicate its willingness to pursue those who do not pay their staff in accordance with the law is a significant corporate failure on its part that can only reflect a failure of corporate culture at the top of HMRC.
The case for reform of this failing institution is made, yet again.
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The NMW team, in my experience, work very hard and push cases as far as they can reasonably do so. In fact I think they sometimes go further than is reasonable, and had the amount involved not been trivial I’d have been looking to take them to the tribunal recently.
“… publicly failing to indicate its willingness to pursue those who do not pay their staff in accordance with the law is a significant corporate failure on its part”
You may not have kept up to date with the changes: almost every case of an underpayment is now to be published, regardless of size or the reason for the underpayment.
I know what the team does: I have contacts there and acknowledge what they do
They don’t prosecute
And that is a serious failure
If you can’t see that….I’ve already made the obvious follow on point
Why is it a failure? Surely getting a situation resolved favourably without the costs and risks of legal action is a success?
In a comment below you say “No prosecutions means no examples”. Surely there are more than enough examples coming out of the “name and shame” regime? If several dozen cases being publicised by gov.uk and picked up by the BBC and broadsheet newspapers isn’t a good enough example, what would suffice?
Did you not notice that this blog post led from a national newspaper comment that there are no prosecutions?
Do you ever get the point?
If you want to change public perception of the issue, then perhaps you should be trying to get the Guardian to point out the known successes of the NMW team rather than a perceived failure?
I’d have presented the story as “The NMW team have dealt with loads of cases (see list), ensured lots of underpayments have been made good, and done it so well that no delinquent employer has been able to challenge the position in the courts”.
You over credit my influence with the Guardian many times over
You could do a Comment is Free article, perhaps? I don’t know how these work, but you have been published there.
Do you honestly think that would get in?
I very much doubt a letter would
I don’t know – as I say, I’m not familiar with how that system works.
If you say that the Guardian would have no interest in an article saying that HMRC is enforcing NMW and so companies should make sure they’re compliant, then I believe you (and I’m disappointed in the Guardian).
I am sure you are always disappointed by the Guardian
I’m disappointed in one way or another by all mainstream media. That’s why read a variety of newspapers – the Guardian as much as (probably more often than, to be honest) the Times, the Telegraph, or the Independent.
Only by getting different angles on an issue can one hope to form a reasonable view.
Is this not the case of the managers of HMRC failing to put the correct resources needed in the correct way.
THese people need the protection of this country.
You’re right: this is bad management decision making, hence the need for reform
I do fully believe the national minimum wage should be enforced, and any party found in breach be held fully accountable. At what point would you recommend prosecution?
If the NMW team at HMRC find a resolution within their recommended guidance, which includes payment to workers as well as penalties, is there still a need? Does the cost of prosecution potentially outweigh the intention to make amends?
I recall the whole internship debacle where goal.com came under fire for effectively ’employing’ its interns (who grossly outnumbered employees). They were publicly admonished. I would imagine this would have been a good time to do it, however they achieved their goal (excuse the pun) and launched an investigation into 100 companies with interns to establish any potential underpayments.
The purpose of prosecutions is to set examples
No prosecutions means no examples
And that reduces the chance of compliance
How can NMW be enforced when HMRC don’t even carry out enough basic checks on PAYE schemes that exist, let alone where they don’t ?
Excellent point