In a consultation launched this week, the trade and industry secretary Alistair Darling has proposed options including fixed penalty fines linked to the number of workers underpaid.

The minister is also proposing that, for the first time, businesses will have to pay interest or other cash to workers they have underpaid on top of repaying arrears. “Paying less than the minimum isn’t only unfair to the workers - it’s unfair to the vast majority of employers who obey the law, because it lets rogue businesses undercut them,” said Darling. “I want to give this simple message to bad employers: pay less than the minimum wage and it will cost you.”

Up to now, employers have not been punished as long as they pay up when they are caught. But the government is now interested in doing more to encourage employers to pay the right amount at the right time. These proposals aim for a simpler, clearer penalty regime to replace the existing national minimum wage penalty regime.

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