Government publishes minimum wage bill

At the end of November 1997, the bill setting out the legislative framework for the UK's new National Minimum Wage was published and received its first reading in Parliament.

The introduction of a statutory National Minimum Wage (NMW) was one of the commitments of the Labour Government that came to power in May 1997 (UK9704125F), and the National Minimum Wage Bill was published on 27 November and received its first reading in Parliament. Margaret Beckett, the President of the Board of Trade, who is responsible for the bill, said that it would set the framework within which the Government would introduce the NMW, once it had carefully considered the recommendations of the Low Pay Commission (LPC). The bill, she stated, will enable the Government to introduce a NMW which is as simple and universal as possible (UK9711177F).

The bill does not set a rate for the NMW, but rather gives ministers the power to make a number of regulations once the LPC has made its report. However, the Chancellor of the Exchequer is thought to favour an hourly rate not much above GBP 3.50, while the chair of the LPC, George Bain, says that GBP 3.75 would not be "outrageous".

The following are the main points of the bill:

• it clearly states that the NMW will be set at a single basic rate with no variations by region, sector, occupation or size of firm;
• it will ensure that all workers are covered, applying to homeworkers, Crown employees, agency workers and the armed forces;
• the only exemptions are for genuinely self-employed people, voluntary workers, children below the school-leaving age, share fishing workers and prisoners. However, people under the age of 26 years (nearly two million of them) might still be excluded;
• the Government will await the report of the LPC before it decides whether there should be a lower rate for trainees and young people;
• it gives the Government the power to appoint new inspectors or use existing officials like tax and VAT inspectors to enforce its provisions;
• it states that businesses refusing to pay the NMW will face fines of up to GBP 5,000;
• employers will be required to keep records of the implementation of the NMW for their workers and provide them with a statement of their entitlement;
• workers will also be given a contractual right to recover the difference, if underpaid, at an industrial tribunal or county court; and
• workers will be protected by law against retaliation or dismissal, and the burden of proof will fall on the employer.