A consultation has begun which proposes options including fixed-penalty fines linked to the number of underpaid workers. It also proposes that for the first time businesses would have to pay interest to workers they have underpaid on top of repaying arrears.
Up to now, rogue employers have been able to escape punishment as long as they paid any arrears. Under the new proposals, employers who fail to pay at least the minimum wage will face prosecution, risking a criminal record and a £5,000 fine.
Trade and industry secretary Alistair Darling said: "Paying less than the minimum isn't only unfair to the workers, it's unfair to the majority of employers who obey the law because it lets rogue businesses undercut them. I want to give this simple message to bad employers - pay less than the minimum wage and it will cost you."
Retailer Tej Daffu owns a Budgens store in Tooting, South London, and is fully supportive of the new fines system. He told Convenience Store: "All employees are entitled to receive a fair wage and it's important all retailers are competing on a level playing field. Retailers who don't pay at least the minimum wage will have more problems in the long run because their employees won't be happy. Because my staff are treated fairly they in turn treat me with respect and do the best they can for the business."
l The national minimum wage for adult workers aged 22 and over is currently £5.35 an hour and will rise to £5.52 on October 1, 2007. Employees aged 18-21 must receive £4.60 from October 1, with the hourly rate for 16- to 17-year-olds increasing to £3.40.