Thousands of workers miss out on millions of pounds in unpaid wages

17th July 2017

Thousands of workers miss out on millions of pounds in unpaid wages

Ensuring staff are paid correctly is a fundamental responsibility for any organisation. But it seems thousands of the lowest-earning workers are missing out on money they are owed as a result of employer error.

According to Government figures, shortfalls in national minimum wage payments hit a record £10.9m last year, affecting close to 100,000 employees.

The figure emerged in a response to a question posed to Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, following the publication of a report by the Joseph Rowntree Foundation in September last year on the causes of and solutions to poverty in the UK.

There are a number of potential reasons for wage under-payment of minimum wage:

– An unscrupulous employer trying to exploit staff;
– A lack of understanding of an organisation’s legal obligations;
– Uncertainty when an employee becomes eligible for a different rate of pay.

The issue doesn’t only affect small or medium businesses. Recently, unintentional underpayments in staff pay packets have affected major retailers too. At John Lewis, a staff-friendly policy of aggregated wages to provide regular monthly income resulted in the company having to provision £36m for underpayments over a six-year period.

Meanwhile, Argos and Tesco have made similar payroll mistakes. Tesco is having to compensate 14,000 staff – at a cost of £10m – who had made salary contributions to pensions, childcare and other schemes which resulted in their pay falling below the National Living Wage level.

According to a study by Middlesex University, British workers lose almost £3bn each year in unpaid wages and holiday, with recruitment agencies among those most likely to be wrongly paying staff.

The Government says it has introduced tougher penalties for non-compliance of national minimum wage. Underpayments occurring since April 2016 have been subject to a penalty of 200 per cent of the value of the arrears, capped at £20,000 per worker. Financial resources available for enforcement are also being increased – from £20m in 2016-17 to £25.3m in 2017-18.

The national minimum wage currently stands at £7.50 per hour for workers over 25.

How can our employment law lawyers help?

If you own or run a business, it’s vital you understand your legal responsibilities and obligations. Failure to do so could see you facing a severe punishment.

Our specialist solicitors in Ipswich, Hadleigh, Felixstowe, Woodbridge and Melton act for businesses large and small in Suffolk, Essex and further afield and can guide you with a minimum of fuss and expense.

To find out how Gotelee can help your organisation, call Andrew West, Employment Partner, on 01473 298102 or email [email protected]

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