Number of workers denied minimum wage doubles in year

The number of workers who are still owed money which employers have failed to pay them under minimum wage laws has more than doubled in the past 12 months, official figures have shown.

313,000 staff were owed total of £68m. Picture: John Devlin

A report from the National Audit Office (NAO) found that HM Revenue & Customs has identified £68 million in arrears for more than 313,000 workers since the minimum wage was introduced in April 1999. Some 58,000 workers still have money outstanding in underpaid wages, compared to just 26,000 in 2014-15.

On 1 April this year, the minimum amount per hour a worker can be paid was increased to £7.20 from £6.75 for workers aged 25 and older after the introduction of the National Living Wage. The National Minimum Wage still applies to those aged 21-24 years old.

The NAO said that in the last financial year, HMRC identified £10.3m in arrears, compared with £3.3m in 2014-15. Unions warned the problem of underpayments was likely to get worse this year with the start of the Living Wage.

The Office for National Statistics reckons there were 209,000 jobs with pay less than the National Minimum Wage held by employees aged 16 and over in April 2015 – 0.8 per cent of UK employee jobs.

The care sector is particularly hard hit by low wages, with the Low Pay Commission estimating that up 10.6 per cent of care workers may not be paid the National Minimum Wage.

Unite Scottish secretary, Pat Rafferty said: “The figures released today show that bad employers are willing to take the risk that they won’t get caught by exploiting the lowest-paid workers in society. The government must do more to guard against this by taking action against these companies and to recoup all losses for workers, many of which are already low paid.”

He added: “We have seen the devious ways in which some employers have tried to claw back the costs following the introduction of the National Living Wage last month. Workers have lost weekend and holiday pay, subsidised food allowances, reductions in break times and the removal of shift allowances.”

Amyas Morse, head of the National Audit Office, said: “With the implementation of the National Living Wage, it is even more important that the government ensures its compliance programme reflects the changing risks within the labour market, and maintains its progress in ensuring all employers pay the minimum wage. The government also needs to reduce the time it takes to investigate complaints and resolve cases.”

HMRC has significantly reduced the average time taken to investigate complaints about employers’ non-compliance with the National Minimum Wage, but some complainants – around 17 per cent – still have to wait over 240 days to get their cases resolved.

However, the NAO’s analysis of HMRC’s caseload shows 72 per cent of open cases are less than 120 days old compared to 42 per cent in December 2013.

Meg Hillier, chair of the Committee of Public Accounts, said: “The National Minimum Wage and the National Living Wage will only be effective if they are properly enforced and if employers are prevented from coming up with workarounds to exploit workers.”

She added: “I am concerned that over 15 per cent of worker complaints to HMRC are still taking over 240 days to complete, leaving a significant number of workers waiting for wages they are legally owed.”