Underpaying apprentice bosses will be publicly named and shamed under government plans to make it easier to clamp down on rogue businesses.
Employment Relations Minister Jo Swinson has announced new rules as part of efforts to toughen up enforcement of the National Minimum Wage (NMW).
The clampdown, which will come into effect from October when the apprentice NMW goes up 3p to £2.68 an-hour, will strip back restrictions on naming employers who break the law.
It comes in addition to financial penalties, of up to £5,000, employers already face if they fail to pay adequately.
“Paying less than the minimum wage is illegal. If employers break this law they need to know that we will take tough action,” said Ms Swinson.
“This is why I’m making changes so it is easier to name and shame employers who break the law. This gives a clear warning to rogue employers who ignore the rules, that they will face reputational consequences as well as a fine if they don’t pay the minimum wage.”
In 2012/13 Her Majesty’s Revenue and Customs (HMRC) identified 736 employers who had failed to pay the NMW leading to the recovery of £3.9m in unpaid wages for more than 26,500 workers.
According to the Low Pay Commission (LPC) annual report this year, data from the 2012 Apprentice Pay Survey indicated that more than 27 per cent of apprentices were paid less than their applicable NMW rate last year, compared with 20 per cent in 2011.
Non-compliance, it added, appeared most prevalent among employers of young apprentices — 40 per cent of all 16 to 17-year-old apprentices were thought to be paid less than £2.65 an-hour, and 25 per cent of all 18 to 20-year-old apprentices were thought to be on less than £2.65 an-hour.
TUC general secretary Frances O’Grady said: “Minimum wage offenders are particularly prominent among apprentice employers. Despite representing a tiny fraction of the workforce, apprentices make up a quarter of all national minimum wage non-compliance cases.”
She added: “The significant minority of employers who dodge the minimum wage have not only ripped off young apprentices, they are also tarnishing the apprenticeship brand that government, unions and employers have so worked so hard to revitalise in the last decade.
“The government must clamp down on these minimum wage rogues before they do any more damage.”
Joe Vinson, NUS vice president, said: “The government’s own research, published last year, shows a fifth of apprentices were paid below their applicable national minimum wage, and non-compliance is particularly shocking in some sectors.
“A third of those doing apprenticeships in construction and almost half of those in hairdressing were paid less than the minimum wage.
“A clampdown on those companies who are breaking the law by failing to pay the minimum wage is of course to be welcomed, but the minister must not overlook the clear evidence of failure to comply with the apprenticeship minimum wage.”
Originally, employers had to meet one of seven criteria before they could be named. The minimum amount of NMW owed to workers had to be at least £2,000 and the average per worker at least £500 before an employer could be referred to the Department for Business, Innovation and Skills from HMRC for naming. The revised scheme removes these restrictions.
The move follows the LPC’s recommendation this year for “a communications campaign and a targeted enforcement initiative to ensure that the apprentice rate is known to employers and apprentices, and that infringers are caught, punished, and wherever appropriate, named.”
The new naming and shaming policy applies to all workers, including non-apprentices.