Employment Bill [Lords]

It is the traditionally lowest paid sectors. For example, this year we have targeted minimum wage enforcement on the hospitality industry, which has a record of low pay. Most employers in that industry are happy to abide by the law, but we have seen some cases of underpayment. We consulted last year on proposals for a new penalty for underpayment of the minimum wage and a fairer way of calculating arrears. Our conclusion was that the enforcement regime should be strengthened in several respects. Clause 8 amends the method of calculating arrears owed to those who have been underpaid. They are currently paid at the rate in force at the time when the underpayment took place, which means that when arrears are paid to cover underpayments that took place over several years, the worker loses out from the upratings that have taken place in the meantime. The Bill will change that so that all arrears owed are paid at the current rate, helping to compensate for the potential loss of purchasing power since the offence originally took place. Clause 9 introduces an enhanced penalty regime, reflecting the serious view taken by the Government of employers who still do not comply with the National Minimum Wage Act 1998. Under the new regime, employers will be liable to a penalty if it is found that they have been making underpayments. The penalty will be based on the employer's level of non-compliance—that is, the total amount of underpayment—subject to a minimum penalty of £100 and a maximum of £5,000. We want to encourage quick repayment, so the penalty will be reduced by one half if the employer repays all arrears to workers within 14 days.