The think tank's analysis of the Labour Force Survey, published to mark the start of its three-year investigation into labour market enforcement, revealed the extent of unlawful working practices across the UK.
It showed that the likelihood of a worker being subjected to labour market violations is closely connected to their personal characteristics, their type of employment contract, the firm they work for, and the industry they're in.
Workers aged under 25 and over 65 are the most likely not to receive a payslip, according to the research. Around one in six workers aged 65 and older also reported that they have no paid holiday entitlement, which is more than any other age group. Meanwhile workers aged 25 and younger are almost twice as likely be underpaid the minimum wage as any other age group.
The analysis found that workers in the hospitality sector are the most likely to miss out on minimum legal workplace entitlements. Around one in seven workers in the sector report receiving no holiday entitlement, three times the rate across the rest of the economy. Meanwhile around one in seven do not receive a payslip (a rate 50% higher than the rest of the labour market).
The analysis also found that workers in small firms (employing fewer than 25 employees) are the most likely to miss out on payslips and holiday leave, as are workers on zero-hours and temporary contracts.
The research echos analysis by the Department for Business, Energy and Industrial Strategy (BEIS) earlier in the year, which found that 15% of workers aged 16 to 24 had not received a payslip.
The government has taken steps to increase both the resources and powers of bodies such as HMRC and the GLAA (Gangmasters and Labour Abuse Authority) in recent years. But the UK still largely relies on individuals to hold non-compliant firms to account, with the employment tribunal (ET) system receiving more than 100,000 applications last year.
However, the Resolution Foundation noted that those most likely to require redress through the ET system are the least likely to use it. It highlighted that young people are disproportionately likely to be subjected to unlawful working practices but make far fewer applications than any other age group. In contrast, managers are the least likely to be subject to labour market violations, but are among the most likely to make tribunal claims.
In July the government revealed proposals for a single labour market enforcement body to enforce minimum wage and holiday pay legislation and that could also encompass workplace discrimination, harassment and bullying. Former BEIS secretary Greg Clark confirmed that Matthew Taylor, chief executive of the RSA, would become the body's interim director.
The Resolution Foundation welcomed the government’s plans to create a new single enforcement body to tackle labour market abuse, but said that it must be properly resourced in terms of funding and staff, and must have legal teeth. The Foundation said that the scale of abuse uncovered by its latest analysis highlights the need for the state to step up to ensure the UK’s labour market rules are better enforced.
Lindsay Judge, senior research and policy analyst at the Resolution Foundation, said that employment law could only go so far in protecting workers, and stronger enforcement is needed. “The UK has a multitude of rules to govern its labour market – from maximum hours to minimum pay. But these rules can only become a reality if they are properly enforced. Labour market violations remain far too common, with millions of workers missing out on basic entitlements to a payslip, holiday and the minimum wage," she said.
Judge added that as well as the introduction of a single law enforcement body, the government should consider conducting investigations into the sectors most affected. “The government’s welcome proposal to create a new single enforcement agency should leave it better placed to tackle these labour market violations than the multiple bodies currently operating, as long as it’s properly empowered and resourced," she said.
“Our analysis suggests that while violations take place across the labour market the government should prioritise investigations into sectors like hotels and restaurants, along with firms who make large use of atypical employment contracts, as that’s where abuse is most prevalent.”