employers who break the law and do not pay their workers the national minimum wage are to face a major crackdown, with maximum fines quadrupling to £20,000, the UK Government has announced.

At present, bosses who break the law on the minimum wage must pay the unpaid wages of their workers plus a financial penalty calculated as 50% of the total underpayment for all workers found to be underpaid. The maximum penalty is £5000.

But the Government has decided to increase the percentage of the financial penalty to 100%, which will raise the maximum fine to £20,000. MPs are expected to back the proposal, with the new fines coming into force next month.

In a further move, the Government wants to bring in legislation at the earliest opportunity so the maximum £20,000 penalty can apply to each underpaid worker.

In 2012, 1.4 million people were paid the minimum wage. For people aged over 21 it is £6.31 an hour; for those aged 18 to 20 it is £5.03; under 18 it is £3.72.

"Anyone entitled to the national minimum wage should receive it," said Business Secretary Vince Cable. "Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crack down on those who do not play by the rules. The message is clear: if you break the law, you will face action."

Mr Cable explained that as well as higher penalties, the Government had made it easier to name and shame employers who failed to pay workers what they were due.

The Business Department is working with HM Revenue and Customs to investigate non-compliance and facilitate prosecutions in the most serious of cases. There is also a guarantee that every complaint made to the free and confidential Pay And Work Rights Helpline is looked at.

"The National Minimum Wage plays an important role in supporting low-paid workers whilst making sure they can still find work. Enforcing this is a key to fairness in our workforce," said Mr Cable.

The intention is to penalise those with the highest levels of arrears. Employers who are found to have made underpayments of more than £20,000 to any worker after the new laws come into force will not only pay the new higher level of penalties but will face this penalty for each such worker.

Where the underpayment for any individual worker or group of workers exceeds £20,000, the penalty will be restricted to £20,000 in relation to that worker or group.

In the last financial year, HMRC identified 736 employers across the UK who had failed to pay the minimum wage, leading to the recovery of £3.9m in unpaid wages for more than 26,500 workers. This was down from the previous year's figure of 968.

Over the same period, some 83 companies in Scotland were found to be not paying the minimum wage, against 73 in 2011/12.

Frances O'Grady, the TUC General Secretary, welcoming the Government move, said: "The TUC has long argued that successive governments have been soft on minimum wage dodgers.

"The plans announced today to quadruple penalties for rogue bosses who cheat staff out of the minimum wage should make employers think twice before illegally underpaying their staff.

"It's great that the penalties for flouting the minimum wage have been raised and that it is easier to name and shame offending employers. It is crucial now that HMRC is given the resources it needs to enforce these new rights properly."

Mr Cable has asked the Low Pay Commission to look at raising the minimum wage and the body is due to publish its report towards the end of next month.

Mr Cable, Work and Pensions Secretary Iain Duncan Smith and Chancellor George Osborne have all signalled they would like to see an increase but with the caveat it should not harm business or risk jobs.