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The Low Pay Commission, who advise the government on minimum wage levels, have compiled a report which reveals that as many as 1 in 5 minimum wage workers could be receiving less than they are entitled to under the law. At its peak in the year, between 305,000 and 580,000 workers were underpaid.
Research from the TUC has previously suggested that the number of workers not paid the full minimum wage is around 250,000.
The Office for National Statistics (ONS) has estimated that as many as 362,000 people do not receive the headline rate of the minimum wage. However, that includes workers whose pay is below the minimum wage for legitimate reasons (for example, they may receive accommodation or other benefits as part of their pay).
Entitlement to the National Living Wage
The report showed that the risk of workers being underpaid increased as the number of those entitled to the National Living Wage (NLW) and minimum wage rose. The report estimated that, as the NLW rises, HMRC will be responsible for monitoring 3.3 million workers by 2020, a rise from the 2.3 million currently recorded.
Female underpaid workers
The report also revealed that women make up the majority of workers whose employers fail to pay them the minimum wage. The Commission's figures suggest that two thirds of underpaid workers are female. However, women make up the majority of those who receive the minimum wage in any case.
Underpayment peaks after a rise in minimum wage
Paul Burton, Head of the Employment Team at Frettens, says “The report found that the numbers affected varied, with underpayment at its highest after an increase of the minimum wage. “This is because many employers take a while to catch up with the new pay rates whenever they are increased. Women are also the least likely to complain about underpayment, which is set out as another contributing factor in the report’s findings.”
At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and Kate or Paul will be happy to discuss it with you.
