Labour & European Law Review Weekly Issue 525 21 June 2017
Research carried out by Middlesex University into the non-payment of wages estimates that £1.2 billion of wages and a further £1.5 billion of holiday pay remain unpaid every year.
The report, entitled “The weighted scales of economic justice”, found that some types of unpaid wages occur repeatedly, such as a failure by employers to provide holiday pay, a failure to pay workers for all the hours they had worked and unauthorised deductions.
Other types of non-payment were episodic, such as not paying the last wage (or outstanding holiday pay) to leavers, unpaid induction or trial shifts, ceasing to pay while approaching insolvency or simply absconding without paying.
The report found that the sectors most likely to abuse workers (including failing to pay wages) were “sports activities, amusement and recreation”; “food and beverage services”; and “other personal services”.
The failure of employers to pay wages proved not to be a barrier to continuing as an employer, and the research suggests there is a widespread culture of repeated non-compliance with employment rights sheltered behind limited liability and a failure to check the standing of potential directors. Indeed, directors of half the companies found to have defaulted on wages and subsequently been dissolved returned as directors of other companies.
Workers who are paid less than the National Minimum Wage can rely on HMRC to at least ask for arrears to be repaid, although the report says it is unclear to what extent this is followed up. In sectors regulated under the Gangmasters Licensing Act, the GLAA could require payment of unpaid wages as a condition of continued permission for agencies to operate under license. The Employment Agencies Standards Inspectorate also has powers to require payment of arrears, but these are less frequently used. Otherwise, it is down to the worker themselves to attempt recovery, either collectively (through their trade union), or as individuals.
In terms of policy and practice, the report argues that there is a desperate need for improved coordination of data on serial offenders, involving at least Companies House, the Insolvency Service, HMRC and the GLAA. The lack of usable data from county courts was also highlighted as a barrier to identifying recidivists. In addition, it stated that workers need better guidance not only on their rights, but the manner in which they can most effectively be enforced.
Gerard Airey of Thompsons Solicitors said, “Unfortunately there are a lot of employers that are failing to pay holiday pay correctly and there is a substantial amount of ongoing litigation about that issue.
“The amount of unpaid wages is a lot more surprising and I would echo the report’s conclusion that there needs to be improved coordination of serial offenders and I believe that there needs to be strong penalties introduced for employers failing to pay wages deliberately”.
To read the full report, go to: http://www.mdx.ac.uk/__data/assets/pdf_file/0019/371017/Weighted-scales-Unpaid-Britain-Interim-report.pdf?bustCache=15096591