National Minimum Wage

Chapter 4: Compliance and Operation of the National Minimum Wage
●● The Wages Order contains provisions governing a range of terms and conditions outside
the NMW Regulations. These include provisions covering flexible workers, holidays,
overtime, on-call, sickness, bereavement leave, and working dogs.
●● Enforcement of the Wages Order is the responsibility of a Defra inspectorate; the NMW is
enforced by HMRC.
4.78 The employee bodies generally believe that pay and conditions will inevitably decline once
the Board is abolished, while employers argue that greater flexibilities post-abolition will
improve the competitiveness of the sector. Based on experiences in other sectors that have
moved away from industry-wide pay determination arrangements, IDS (2011b) posited a
number of possible outcomes in the agricultural sector following abolition of the Board, but it
is difficult to judge at this stage what the balance of outcomes will be and, therefore, what
the full implications of transition to the NMW will be. Our remit invited us to consider the
implications of the abolition of AWBEW as part of the Government’s simplification agenda.
Because the Agricultural Wages Order provides statutory protections beyond those set out in
the NMW Regulations, abolition and the removal of these protections will tend to simplify the
minimum wage regime in agriculture.
4.79 In the meantime, we have asked our Secretariat to give thought to how we can assemble
evidence on the impact of the changes, and we will commission research as necessary. It is,
however, already clear to us that abolition of the Board would bring with it the need to ensure
employers and employees in the sector are aware of the change and its impact – we note,
for example, some stakeholder confusion over the requirements and limitations of Fair Piece
Rates – and have already drawn our view to the attention of Government officials.
4.80 Having considered a number of operational issues under the minimum wage, we now go on
to look at how the enforcement function is being carried out and the extent of compliance
with the minimum wage.
Compliance and Enforcement
4.81 In our 2011 Report we set out actions the Government had taken in relation to enforcement
of the minimum wage. This was in the context of the new compliance strategy it had
published, setting out its aim for the enforcement regime over the next five years. We looked
at where progress had been made and also where we had concerns, in particular over the
reduction in spending on awareness raising activities. In this next section we look again at
aspects of the enforcement regime and changes that have occurred since our last report.
Compliance Strategy
4.82 The compliance strategy published by the Government in March 2010 was based on one
clear aim – that everyone who is entitled to the minimum wage should receive it – and it set
out how the Government intended to achieve this through the use of guidance, enforcement
and the legal regime. In the autumn of 2011, the Government published its second annual
report on its enforcement performance (BIS, 2011b).
119