Minimum wage, minimum shame?

On 8 December, the Department for Business, Energy & Industrial Strategy (BEIS) named & shamed another 260 employers for non-compliance with the national minimum wage. Inevitably, press and media coverage of this round of naming & shaming – the 13th since the scheme was rebooted in 2013 – focused on the list being topped by the household-name retailers Primark and Sports Direct.

Primark had somehow managed to underpay 9,735 of its workers a total of almost £232,000 (an average of £24 per worker), but this sum was dwarfed by the combined total of £946,612 that Sports Direct and two employment agencies supplying workers to the controversial retailer’s Shirebrook warehouse had failed to pay to a combined total of 4,362 workers (an average of £217 per worker).

That combined total of £0.95m is the third largest sum of arrears owed by any of the 1,539 employers named & shamed by BEIS to date, and accounts for 54% of the £1.76 million collectively owed by the 260 employers named in this round. But it is still someway short of the £1.74m owed by the London-based security firm TSS Ltd, named & shamed by BEIS in February 2016 and featured as a case study of ‘wage theft’ in the recent Middlesex University Business School research report Unpaid Britain: Wage default in the British labour market.

Indeed, as in previous rounds, the great majority of the 260 appear to be small fry: all but 13 owed less than £10,000 of arrears, 225 (86%) owed less than £5,000, and 137 (53%) owed less than £1,000. Only 36 had underpaid ten or more workers, 199 (76%) had underpaid fewer than five workers, and 120 (46%) had underpaid only one worker. Of the 40 hairdressing businesses, 32 owed less than £2,000, and 26 had underpaid only one or two workers. Similarly, of the 58 hospitality businesses, 43 owed less than £2,000, and 37 had underpaid only one or two workers.

To put this round of naming & shaming in context, the Low Pay Commission noted, in its September 2017 report Non-compliance and enforcement of the National Minimum Wage, that 784 (61 per cent) of the 1,279 employers named & shamed by BEIS as of August 2017 had underpaid just one worker. Only six of the 1,279 employers had underpaid more than 1,000 workers.

However, as with the three previous rounds of naming & shaming – in August 2017, February 2017 and August 2016 – what the BEIS press release failed to say is that 39 of the 260 employers also paid further arrears totalling £1,011,190 to 21,495 workers, under the so-called self-correction mechanism quietly introduced by BEIS/HMRC in 2015. Once again, this information was only elicited by a written Parliamentary Question by Caroline Lucas MP (aka my boss).

That £1.01 million is almost twice the £0.58 million of arrears owed by the 256 named & shamed employers other than Primark, Sports Direct and the two employment agencies supplying workers to Sports Direct. And it’s more than six times the £0.15 million collectively owed by the 120 employers who had underpaid only one worker. But no financial penalties have been levied on that £1.01 million of arrears, and none of the 39 have been named & shamed for their share of it. Indeed, the identity of the 39 remains a secret.

In the last four rounds of naming & shaming, a total of 1,049 employers were named by BEIS for collectively owing some £5.2 million to 47,336 workers. And, according to the Answers given to the parliamentary questions tabled by Caroline Lucas, 169 (16%) of those 1,049 employers paid additional, self-correction arrears (for which they were not named & shamed) totalling some £4.1 million, to 71,766 workers. Which suggests that those who paid self-correction arrears include the very worst offenders.

As noted previously on this blog, such self-correction arrears now account for the bulk of the arrears recovered for workers, directly or indirectly, by HMRC enforcement of the minimum wage. But is it fair that the very worst offenders are thus able to minimise both their ‘shame’ and the sum of penalties imposed? Do the public not deserve to know the full extent of an employer’s disregard of the law? And, given the scale of the non-compliance involved, why are none of the self-correcting employers facing criminal charges?

To date, ministers have got away without having to provide answers to these questions. But with each new round of naming & shaming, the pressure to provide answers – and to review the naming & shaming scheme – is going to grow. For, as the Low Pay Commission noted in its September 2017 report on enforcement, the naming & shaming scheme is “helping to raise the profile of enforcement activity and awareness of workers’ rights”.

Perhaps it would do so even more if the public, and employers, were told the full truth.

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About wonkypolicywonk

@wonkypolicywonk is a policy minion who has been lucky enough to work at Maternity Action, Working Families, Citizens Advice, the National Audit Office, the Law Society, and Amnesty International UK. He currently bangs his head on a desk in Parliament.
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One Response to Minimum wage, minimum shame?

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