The National Audit Office has produced a report titled – “Ensuring employers comply with National Minimum Wage regulations”. The briefing examines the government’s processes for investigating complaints about employers not complying with National Minimum Wage regulations.
The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. It is intended to protect as many low-paid workers as possible without reducing jobs or damaging the economy. The National Living Wage came into force on 1 April 2016. The Department for Business, Innovation & Skills (BIS) is responsible for policy and strategy and HM Revenue & Customs (HMRC) carries out compliance and enforcement activity on BIS’s behalf. Investigations arise from two key sources: direct contact from people making a complaint; or targeted enforcement campaigns launched by the government based on its own risk assessment.
In November 2015, the Office for National Statistics published its latest Annual Survey of Hours and Earnings which showed that around 209,000 workers (aged 16 and over) were paid less than the rate of the National Minimum Wage.
This represents less than 1% of UK jobs with the number has been largely unchanged since 2011.
The NAO decided to review the concerns raised by correspondents and considered:
the government’s oversight and management of investigations the time it takes for the government to respond to complaints of non-compliance and, where appropriate, to issue notices of underpayment so that arrears for individuals can be recovered, and enforcement of the National Minimum Wage in the care sector.Some interesting facts came out in the report concerning the time taken to investigate complaints.
HMRC has significantly reduced the time taken to investigate complaints reducing the average time it takes to close cases from 170 to 82 calendar days – an overall reduction of 52%. HMRC has a target to complete 80% of all investigations within 240 days and, as of December 2015, it was achieving a rate of 87%. A number of factors are likely to have contributed to HMRC’s improving performance in closing cases quicker. For example, increases in resources, a change in the service level agreement to focus on clearance times, and changes to the investigations process. These developments are relatively new and it may take time before the relative importance of the reasons for this improvement in performance is fully understood. The NAO analysed HMRC’s caseload as at 31 December 2015 and found that: 625 open cases (43%) had been open less than 60 days (compared to 27% in the same period in 2014). Between 1 April 2015 to 31 March 2016, HMRC closed 469 complaints which had taken in excess of 240 days to complete (17% of all cases closed in in that period). Average arrears at the end of December 2015 were £164 per worker. There are also some cases where the employer takes an appeal to Employment Tribunal or HMRC passes the case to the Crown Prosecution Service to consider prosecution. Ten of the cases open over 240 days at the end of December 2015 fell into these categories, with a further 15 reopened to attach further correspondence.The National Audit Office report is available here.
