The standard minimum wage for adults is currently �5.52 an hour.

Companies will risk unlimited fines, with the most serious cases of non-compliance tried in a Crown Court.

The way arrears are calculated will also change, boosting the amount of back pay due to underpaid employees.

The TUC union body, which had campaigned for higher fines, welcomed the government's proposals.

Benefit

The minimum wage was a very important new right for people at work and we want to see it properly enforced Pat McFadden, Minister for Employment Relations

Almost all workers in the UK aged 16 or over are entitled to the minimum wage, regardless of the kind of work they do or the size of their employer.

More than a million workers received a pay rise when the latest rates took effect.

On 1 October the standard adult rate rose from �5.35 to �5.52, and from �4.44 to �4.60 for 18 to 21-year-olds.

"The minimum wage was a very important new right for people at work and we want to see it properly enforced," said the Minister for Employment Relations, Pat McFadden.

"Most businesses do treat their staff fairly. These reforms are targeted at those who don't.

"Legitimate businesses will therefore benefit from this clearer and more effective enforcement on those who do the wrong thing," he added.

Enforcement

The government says it has helped more than 78,000 workers recover about �27m in unpaid wages since the minimum wage was introduced.

But unions have long called for the government's enforcement powers in this area to be strengthened.

A small minority of rogue employers have consistently stuck two fingers up at the law Brendan Barber, TUC

Under the current system, there is no initial penalty for employers who underpay their staff, and arrears are calculated at the rate that applied when the offence was carried out.

A small minority of companies who fail to pay the arrears within four weeks face a fixed penalty of �229 per worker.

The worst employers can be tried in the magistrates courts where the maximum fine is �5,000.

Under the new regime, arrears would be worked out at the current minimum wage rate.

All employers caught underpaying would face a fixed penalty. This would be set at half the total value of the arrears, subject to a minimum of �100 and a maximum of �5,000, and would be halved if paid within four weeks.

Consistent offenders could be tried in a Crown Court and face an unlimited maximum fine.

The same proposals also give increased powers to the Employment Agency Standards Inspectorate and introduce unlimited fines for agencies which treat agency workers unfairly.

'Rogue' employers

TUC general secretary Brendan Barber welcomed the new measures.

"Since the minimum wage was introduced in 1999, a small minority of rogue employers have consistently stuck two fingers up at the law," he said.

"The TUC has long argued that the current maximum fine of �5,000 is too low to deal with the worst offenders, so we welcome plans to allow much bigger fines for those who remain determined to cheat their workers."

"The move to count all unpaid arrears at the current rate will give much-needed extra money to workers who have been paid illegal poverty wages over a long time," he added.

Any worker who believes they are being underpaid is advised to contact the national minimum wage helpline on 0845 6000 678.