Hospitality businesses 'named and shamed' for failing to pay minimum wage

By Carina Perkins contact

- Last updated on GMT

Related tags: Minimum wage, Government

Employers that fail to pay minimum wage face penalties of up to £20,000
Employers that fail to pay minimum wage face penalties of up to £20,000
A pub, a restaurant and two hotels were among 25 businesses ‘named and shamed’ by the government for paying staff less than the legal minimum wage.

The list was published by the Department for Business, Innovation & Skills (BIS) as part of tough new legislation introduced in October 2013 to crack down on employers that break National Minimum Wage law.

Businesses on the list were ‘thoroughly investigated’ by HM Revenue & Customs following complaints from employees, and were given the opportunity to appeal before being named.

The investigation revealed that:

  • Perth Hotels in Perth neglected to pay £556.80 to a worker
  • Satwinder Singh Khatter and Tejinder Singh Khatter of The Bath Hotel in Reading neglected to pay £1,237.79 to two workers
  • Mr and Mrs Hampton of The Wheatsheaf Inn in Cheshire neglected to pay £2,057.88 to four workers
  • Luigi’s Little Italy Ltd in Yorkshire neglected to pay £281.04 to 5 workers

Under the new legislation, employers that fail to pay their staff minimum wage face penalties of up to £20,000, which is four times higher than the previous penalty.

The government is also now seeking to legislate so that employers can be given penalties of £20,000 per individual worker underpaid, rather than having a maximum penalty per employer.

Business Minister Jenny Willott said: “Paying less than the minimum wage is not only wrong, it’s illegal. If employers break the law they need to know that they will face tough consequences. Any worker who is entitled to the minimum wage should receive it.”

Jackie Grech, legal and policy director at the British Hospitality Association, added: “The British Hospitality Association represents 40,000 leading hotels, restaurants and establishments in the UK. We are pleased and proud of the employees and staff of the industry which is why our membership supports and complies with the minimum wage law. We encourage those companies who have acted irresponsibly in failing to pay the minimum wage to immediately change their tune. As an industry we support campaigns which encourage job growth, skills training and career progression. Initiatives such as the Tourism Council and the Big Hospitality Conversation make strides in encouraging the continued success of the industry, one employee at a time. While we are disappointed that any company fails to follow the minimum wage law, we support the ‘name and shame’ policy because it will encourage positive treatment of employees and hopefully lead to more compliant and better opportunities for job seekers.”

Reputation damage

Research published by BIS at the end of last year​ suggested that failing to pay employees minimum wage can do serious damage to the reputation of a hospitality business.

The report, by the National Minimum Low Pay Commission, revealed that 80 per cent of people would not use a business that if they knew it paid less than minimum wage.

BIS said the research also showed that staff are generally less productive when paid less than the minimum wage, which could have a serious impact on service.

Future legislation

Minimum wage rates are due to increase again in October 2014, with the adult rate increasing by 19p from £6.31 to £6.50. The rate for 18-20 year olds will increase from £5.03 to £5.13 per hour, while the rate for 16-17 year olds will go up from £3.72 to £3.79 per hour and apprentice rates will go up from £2.68 to £2.73 per hour).

Employers should also keep an eye on future legislation surrounding zero-hour contracts, which was highlighted as an area for future policy in the Queen's speech​. The government has so far remained vague on what aspect of zero-hour contracts it is looking to crack down on, but there could be important consequences for hospitality businesses.

Workers that suspect they are not being paid the correct wage should contact the Pay and Work Rights helpline on 0800 917 2368.

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