UK workers are being cheated out of billions in unpaid wages

ETI Policy and Advocacy Adviser, Sandra Martinsone, reflects on new research from Middlesex University looking at unpaid wages in Britain

Each year, at least 2 million workers in the UK are paid less than they should be. This amounts to at least £1.3bn in unpaid wages and £1.8bn in unpaid holiday pay.

These are just some of the findings of a shocking new report “Unpaid Britain: wage default in the British labour market” published yesterday by Middlesex University.  

The report concludes that while some underpayments may be down to error, businesses are also using deliberate large scale strategies to get away with underpaying their workers.

These strategies may include misinterpretation of employment law, mis-recording of workers’ time, misclassification of work relationships, deductions from pay (breaks, uniforms, lateness etc), non-payment of over-time, payment of holiday pay only when asked, insolvency or the practice of ‘phoenixing’, whereby a company goes bankrupt and then re-establishes itself under a different name.

Protecting vulnerable workers

The report also shows how workers often choose not to complain or report employer’s misconduct out of fear, shame, a lack of support or a lack of knowledge about their labour rights.

One of the GLAA’ s strategic objectives in its recently published 2017 - 2020 strategy is to protect vulnerable workers and prevent their exploitation, and this report underlines just how urgent enforcement really is if companies are to see non-compliance as a high risk, high cost tactic.

More needs to be done to address the root causes of unpaid wages, and many of the recommendations contained in the report chime with ETI’s recent submission to the strategy consultation of the Director of Labour Market Enforcement, in which we called for:

• A strong, state-led licensing system is needed to combat exploitation and provide a level playing field for businesses operating in the UK;
  
   
• A single labour inspection unit must be created to coordinate inspections and monitor compliance around key areas of labour legislation, such as wages, overtime, holiday pay, health and safety and employment contracts, and ensuring that workers have access to all their entitlements;
  
   
• Public procurement should drive respect for workers’ rights in public sector supply chains;
  
   
• A clear (and enforceable) definition of decent work is needed that sets out minimum standards and expectations, including temporary work.
  
   
• The right to freedom of association and collective bargaining should be strongly supported and promoted, giving workers platforms and tools to protect their rights;
  
   
• Regular dialogue between the government, civil society, trade unions, businesses and local authorities is needed for effective information, evidence and intelligence exchange.