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The government’s policy of ‘naming and shaming’ organisations that break minimum wage rules is an effective deterrent against non-compliance, but tougher financial penalties are needed to further minimise incentives for underpayment. This is according to the Resolution Foundation think-tank, which found that smaller firms are more likely to lose out because of the reputational impact “naming and shaming” can have on their organisations, while some larger organisations – including Primark, Tesco and Boohoo – have seen little impact on their share price or sales after being exposed on the government website for breaching minimum wage rules. Its No shame, no gain? report suggests that policymakers should strengthen and raise the profile of HMRC’s existing programme of publicising the firms that break the rules, after the think-tank found only one in five firms had heard of the policy. It says that more rigorous enforcement is needed to increase the chances that non-compliant organisations are exposed. While bigger firms hit the headlines when they are named, smaller organisations are more likely to be non-compliant, with the Resolution Foundation finding that minimum wage workers in micro-businesses are 37% more likely to be underpaid than those in the largest businesses. Tougher financial penalties should also be brought in, it adds. The report estimates that a firm underpaying the minimum wage would currently need to be fined around 700% of arrears to effectively counteract the savings it makes, more than three
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