Latest Public Sector News

11.11.13

Employers breaching minimum wage laws face £5,000 fine

Companies could face on-the-spot fines for failing to pay the national minimum wage, HMRC has warned.

It is sending letters to 22 businesses who have recently placed adverts for unpaid internships, pointing out that they could be publicly named and shamed, and be liable for a £5,000 fine if they are in breach of minimum wage laws.

The HMRC letters will say: “If you have got things wrong, but you put them right now, we will not charge you a penalty. If you wait, and we select you for a check and discover the problem, we may charge you a penalty of up to £5,000 and you may be publicly named and shamed by the Department of Business Innovation & Skills as an employer who isn't paying [national minimum wage].”

Since the start of this tax year in April, penalties have been issued to 466 employers.

Employment minister Jo Swinson told the Guardian: “Those occasions when you have people working for months on end for free, really is problematic.

“We don't want to have a system where people get exploited and companies try to help themselves to free labour … when receiving these letters I would hope that firms think very carefully about how the law [operates] for the opportunities they're offering.”

HMRC spells out the law on internships and employment rights here, noting that interns are not entitled to the national minimum wage if they are students, on a school work experience placement, or if they are voluntary workers or doing work shadowing or observation. 

It explains: "An intern’s rights depend on their employment status. If an intern is classed as a worker, then they’re normally due the national minimum wage. Internships are sometimes called work placements or work experience. These terms have no legal status on their own. The rights they have depend on their employment status and whether they’re classed as a worker, a volunteer, or an employee. If an intern does regular paid work for an employer, they may qualify as an employee and be eligible for employment rights.

"An intern is entitled to the national minimum wage if they count as a worker. Employers can’t avoid paying the National Minimum Wage if it’s due by saying or stating that it doesn’t apply, making a written agreement saying someone isn’t a worker or that they’re a volunteer.

"An intern is classed as a worker and is due the National Minimum Wage if they’re promised a contract of future work.

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