A report by the Low Pay Commission (LPC) into compliance with payment of the National Minimum Wage (NMW) has concluded that low paid workers are more vulnerable than ever to the risk of underpayment as a result of the coronavirus (COVID-19) pandemic.

In particular, it highlighted the threat of unemployment, with low-paying sectors such as hospitality and leisure hit hardest by restrictions and large numbers of workers facing possible redundancy. As the commission points out, if people are more concerned about keeping their jobs, they are unlikely to report abuses such as the underpayment of NMW or non-payment of holiday, sick pay and the failure to observe health and safety rules.

Certain groups are also more likely to be underpaid than others. For instance, women are more likely to experience underpayment than men, and workers in small businesses are more likely to be underpaid than those in large ones.

A low-paid worker’s chances of being underpaid also vary according to their occupation. Consistently, the commission observs high rates of recorded underpayment for childcare workers, as well as office workers and those in transport. The largest absolute numbers of underpaid workers are in the largest low-paying occupations: hospitality, retail and cleaning.

There are two main routes for a worker to raise a case of underpayment with HMRC - they can call ACAS or contact HMRC directly via an online form. The number of complaints received, however, remains small compared to the estimates of the numbers of underpaid workers. This suggests either low awareness of rights, or widespread reluctance to engage in the complaints process.

As a result, the commission has made a number of recommendations to the government to build confidence in the process. These include:

  • Making workers aware that the process is confidential and that they can remain anonymous
  • Making the system accessible to all workers – including those for whom English is not a first language
  • Publicising successful cases where workers have complained and been awarded arrears
  • Working closely with trade unions to reinforce routes for complaints and build an understanding among workers of how the enforcement system works.

You can read the report in full here.