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Wage exploitation left unchecked by government

Employers paying below the National Minimum Wage only stand to be found out once every 500 years.

Research by Focus on Labour Exploitation (FLEX) and Unchecked UK has found that cuts to enforcement bodies have severely impacted their ability to ensure companies obey the law, as the HMRC National Minimum Wage team only have the capacity to check each business once in every 500 years.

Nicola Inge, employment and skills director at Business in the Community, told HR magazine that paying a fair and living wage is a critical part of ‘good work’.

More on wage theft:

John Lewis one of nearly 200 companies to pay staff less than the minimum wage

Employers risking fines for National Minimum Wage breaches

Third sector organisations fail to pay living wage

“If companies fail to offer at least the legal minimum wage and enforcement bodies don’t step in, people suffering from this negligence will be at greater risk of falling into poverty. 

“With the cost of living rising, this needs to be addressed right now as we approach a hard winter.”

The government has taken a vocal stance against companies that flout the law, and ‘named and shamed’ 191 companies in August - including John Lewis, the Body Shop and Enterprise.

Phoebe Clay, director of Unchecked UK, said: “The government has made it clear that it is committed to making sure that hard-working Brits are looked after in the workplace, and are paid a fair day's wage for a fair day's work."

However commitments are not enough, she warned.

“Unless they are backed up by proper enforcement, the government’s commitments to level up wages and standards for those workers – who themselves play by the rules – aren’t worth the paper they’re written on.”

HMRC told HR Magazine that since 2015 they have recovered over £100 million in underpayments for more than a million workers, and consider all complaints made.

In 2017, however, a study by Middlesex University and the Trust for London estimated conservatively that companies steal £3 billion annually from workers in unpaid wages and holiday pay.

The study suggested that around two million workers in the UK were being exploited in this fashion.

FLEX and Unchecked research similarly found that health and safety inspections had plummeted. Proactive inspections fell by more than 90% in the past decade, caused in the main by cuts to inspection bodies’ funding.

Funding for the Equalities and Human Rights Commission (EHRC) for example has decreased by 78%, with its staff reduced by 54%. Similarly, the Health and Safety Executive’s funding is down by 60% compared with a decade ago, and its staff reduced by 37%.