Tory government launches ‘secretive amnesty’ for up to 3,000 firms that fail to pay minimum wage

The Tory government has launched a “secretive amnesty” for up to 3,000 firms who failed to pay the minimum wage.

Businesses will be able to repay cheated workers without being fined or exposed publicly under the programme, which launched around a month ago.

Since a crackdown began in 2013 more than 1,000 firms have been named, shamed and issued penalties for failing to pay staff the minimum wage.

Yet some firms are allowed to dodge this process if they identify underpayments themselves and refund workers.

The government claims this ‘self-correction’ system, which dished out £10million in back pay over the last two years, is “not a soft option” and is only used in “appropriate situations”.

But HM Revenue and Customs has now written to around 3,000 firms it deems at “higher risk” of not paying the legal minimum – and offered them the chance to use the scheme.

A stock image of a man cleaning a window
Civil action is taken against firms cheating workers – but it’s rare to be prosecuted

A blog on business consultancy giant PWC’s website boasted the move was “good news” because “it provides an opportunity for employers to deal with historical risk with reduced costs and minimal reputational impact.”

The blog claimed many breaches of the law were “technical” because it is so complicated.

But Green party leader Caroline Lucas said the scheme was “disturbing”.

She told the Mirror: “It is not at all clear to me why serious breaches of minimum wage law should go unpunished.

“It’s not good enough for serious offenders to simply pay the arrears owed.

“Such a secretive amnesty makes a mockery of ministers’ repeated claims to have strengthened enforcement with higher penalties and the naming and shaming scheme.”

MP Caroline Lucas said “serious breaches of minimum wage law go unpunished”

The scheme is aimed at small and medium-sized firms. Firms cannot use it if they have a history of minimum wage breaches or a current live investigation.

HMRC has not yet revealed how many firms have taken up the offer to repay arrears, or how exactly it decided they were at “higher risk”.

Minimum wage offenders rarely face criminal charges – even when they are named and shamed and issued penalties for breaking the law.

The government says prosecutions are reserved for the most serious cases because otherwise it takes longer for workers to get their wages back.

Just 13 firms were successfully prosecuted for minimum wage offences between 2007 and January this year.

TUC General Secretary Frances O’Grady said: “Employers should not still be making mistakes nearly 20 years after the minimum wage was introduced.

“The minimum wage must be fully enforced,” TUC chief Frances O’Grady said

“The minimum wage must be fully enforced, whether employers are deliberate cheats or simply careless.”

HMRC stressed firms will be “fully investigated” if they fail to repay all wage arrears voluntarily and there are “robust assurance processes” to check this happens.

Despite launching with little fanfare, officials insisted the move was not a secret because last year’s Autumn Statement promised “additional support targeted at small businesses to help them to comply”.

An HMRC spokeswoman said: “HMRC is committed to getting money back into the pockets of underpaid workers.

HM Revenue and Customs offices
HMRC insisted the system was ‘not a soft option’ and not a secret

“As announced at Autumn Statement 2016, we are writing to businesses inviting them to check that they are following the NMW rules.

“All businesses involved will be expected to repay any arrears which may be owed. This applies to any business as long as they have not been investigated for NMW breaches in the past.

“Last year, HMRC investigated over 2,600 businesses, identifying over £10.9 million of underpaid wages for more than 98,000 workers.

“HMRC responds to every complaint received and takes risk based enforcement action to ensure workers receive what they are entitled to.”

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