Record Living Wage Underpayment: Named and Shamed Well-Known Employers

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Record Living Wage Underpayment: Named and Shamed Well-Known Employers

By Trevor Clawson.

More than two hundred organisations have just been named and shamed by the Government over their failure to comply with current Living Wage regulations. In addition to fines, the employers in question are facing a record collective back pay bill of £1.44 million.

A report released jointly by Her Majesty’s Revenue and Customs (HMRC) and the Department for Business, Energy and Industrial Strategy (BEIS), identifies  239 employers that have underpaid their workers, with the earliest cases going back as far as 2011.

The underpayments haven’t always been obvious. Rather than simply paying an hourly rate that is below the Living Wage threshold, the report suggests that significant numbers of employers are  – either deliberately or inadvertently –  sidestepping the rules by enforcing policies have the effect of reducing the take-home pay of their staff.

Typical examples include: charging staff for uniforms; failing to pay for travel time within the working day; underpaying apprentices; using the wrong time periods for calculating pay;  and misusing the rules that allow employers to deduct wages to pay for accommodation.

Knowledge is Power

Arguably, the problem facing workers is that many will not necessarily know the finer details of the Living Wage regulations and, therefore, accept at face value deductions made by employers.  Acknowledging that employee awareness will play a huge part in helping the Government to enforce the minimum wage rules, Business Minister Andrew Griffiths stressed his department’s commitment to ensuring the issue has a high public profile. Hence the decision to publicly named employers who have been breaching the law.

“Our priority is making sure workers know their rights and are getting the pay they worked hard for,” he said. “The UK’s lowest-paid workers have had the fastest wage growth in 20 years thanks to the introduction of the National Living Wage and today’s list serves as a reminder to all employers to check they are getting their workers’ pay right.”

The government has been making an effort to educate workers on their Living Wage rights through a series of advertising campaigns.  For instance, a new campaign was launched in April of this year – coinciding with the latest increase in the Living Wage/ Since then 600,000 people have visited the associated website where information is available. In addition, over the past five years, the Government has made it a matter of policy to name organisations that underpay.

High Profile Employers

The latest report – which contains one of the longest lists of non-compliant companies and will trigger record back payments – suggests employers have not universally fallen into line and that workers are not necessarily knowledgeable or confident enough to stand up for their rights.

Perhaps what is most surprising about the latest report is that the list of underpaying employers contains organisations that have a high profile, either nationally, or within their own communities.  For instance, the Odeon and UCI Cinema Group underpaid a total of 237 workers, with the average arrears coming in at £18.73 per member of staff. The Card Factory underpaid around 10,000 shopworkers to a total of £430,000.  Well-known sports clubs also featured on the list of offenders, including football clubs, Bristol City, Doncaster Rovers, Dundee and Northampton Town. and cricket clubs. Durham, Derby and Sussex.

Record Living Wage Underpayment: Named and Shamed Well-Known Employers

Active Enforcement

The government is pursuing a policy of ‘active enforcement’ against organisations that breach the rules.  Essentially this means that employers who are found to have underpaid must pay arrears to the affected workers. In addition, they may also be fined up to 200% of the amount owed.

Meanwhile, Funding for Living Wage enforcement is being stepped up. In the current financial year, the government has earmarked spending of £26.3m, roughly double the amount allocated in 2015. For its part, HMRC is proactively investigating and enforcing backpay – a move welcomed by the Low Pay Commission.

“It is crucial that employers understand their responsibilities and workers know their rights around the minimum wage – that is why active enforcement and effective communication from the Government is so important, “ said Commission Chairman Bryan Sanderson. “It is, therefore, encouraging to see that HMRC has recovered unpaid wages for the largest number of workers yet in this round of naming and shaming.”

Claims Process Open To All

However, employees don’t necessarily have to wait for HMRC to compile the figures and take action against companies and organisations. As things stand, employers must pay a minimum wage of £7.83 to all employees aged 25 and over – there are lower rates for younger workers – and there are no exceptions in any sector. And as Emma O’Leary of Essential Solicitors points out, there is a claims process that is open to all at any time.

“The first thing they (workers who feel they have been underpaid) should do is report the underpayment to HMRC. Then they can bring a claim in the employment tribunal for arrears of pay,” she says. “Now that tribunal fees have been abolished, there are no barriers to bringing up a claim – whereas previously the fee might have caused some to think twice.”

Making a claim will not necessarily mean a dispute with the employer. Once a report has been filed online, O’Leary says the next step is to inform the conciliation service ACAS. There is then a one month period during which the employee and employer have an opportunity to settle amicably.  If conciliation isn’t possible, the claim will be heard by a judge.

O’Leary stresses that the process of making the claim is relatively simple. However, the claimant should bring in expert help.

“We recommend you take legal advice and ideally representation to ensure that you have a valid claim and give you the best chance of success,” she says.

By | 2018-07-11T13:18:26+00:00 July 11th, 2018|Business, Personal Finance|0 Comments

About the Author:

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Trevor is a UK-based business journalist and author, specialising in startups, tech companies and fast growth businesses. His career in journalism began as Business Editor of BBC World television's pan-European text news services. From there he went on to edit e.Business and PLC Director magazines before going freelance. He is the author of three books, including The Unauthorized Guide to Business the Jamie Oliver Way, which has been translated into five languages. Follow Trevor on Twitter @trevorclawson

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