Investigating a case study of non-payment

Yesterday the Guardian published an excellent article on the Unpaid Britain preliminary findings report. As part of this article they included an illustrative case study of Beach Blanket Babylon (BBB). This company first came to our attention at the beginning of May when the staff started protesting outside the BBB restaurant in Shoreditch, after being collectively owed £10,000 in unpaid wages.  This case was a clear illustration of what the Unpaid Britain report identified as a business strategy where unpaid wages occur repeatedly  “little and often”. The workers reported to us that the amount that they would be paid into their bank account would be random, and never completely match what they were owed.

“maybe you got £100 or £200 as you see from the statement […],when the due date for the new payslip they just send us like a couple of hundred”.

The workers  informed us that this underpayment of wages added up. They claimes that when they asked for their wages management would tell them that they did not have the money and the workers would have to wait, until the next Wednesday or Friday when they were expecting a large party. When that day came they might be paid some of what they were owed but would be told to wait again. When the workers finally demanded all their wages they said they were told to leave and not to come back.

Meanwhile the Guardian article shows that the owner Robert Newmark had received a substantial amount of money from the previous Limited company that ran BBB before it was placed into liquidation. Robert Newmark and his son Bret have both been disqualified as being directors from limited companies for a joint eight and half years. They owe HMRC “£1,021,477 in relation to arrears of VAT, PAYE and National Insurance Contributions”, despite this Robert Newmark caries on being the sole shareholder of the limited company who owns BBB, and pays the staff directly from his non-limited company.

I am sad to reveal that this is not a one off case but is something that we have come across more often with other restaurants. This we feel is a clear business strategy of non-payment and will be drawing on further in our final report that we will be publishing in November. In the meantime have a look at the Guardian article it is an excellent read and a good synopsis of our interim report. I would like to thank Felicity Laurence for her excellent work.

Once the Guardian contacted BBB some money was paid to the workers.

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The weighted scales of economic justice: Unpaid Britain interim report

Unpaid Britain – interim report reveals that workers are denied £1.2 billion of wages and £1.5 billion of holiday pay each year

Researchers from Middlesex University London, funded by Trust for London, describe today’s (15/6) interim report, results about unpaid workers in Britain as the “tip of the iceberg”.

The report “The Weighted Scales of Economic Justice”* from the Unpaid Britain project based at Middlesex University estimates that:

  • £1.2 billion of wages are unpaid each year
  • £1.5 billion of holiday pay are unpaid every year
  • one in 12 workers does not receive a payslip (a breach of employment rights)
  • one in 20 workers receive no paid holidays (a breach of employment rights)
  • on 23,000** occasions in a year the impact of unpaid or delayed wages is so severe it leads to workers having no food
  • sectors most likely to not pay wages include sports activities, amusement and recreation, food and beverage services, employment activities – in London arts and entertainment as well as construction are also high offenders.

Lead author, Nick Clark from Middlesex University London said: “It has not been easy to find accurate data on the true scale of failure to pay wages in this country and I fear that this is the tip of the iceberg in terms of painting a realistic picture of unpaid Britain. One of the problems is that there is no official data on non-payment. Not paying wages is a civil rather than a criminal offence which means there are no crime statistics.

“Our interim findings demonstrate that there is a desperate need for improved workers’ protection and better guidance on their rights and how these can be enforced. With an uncertain Brexit around the corner there has never been a more important time to safeguard, protect and enhance workers’ rights.”

The researchers found employers can withhold wages with impunity and there is a widespread culture of repeat offenders. Moreover they found that directors of half of the companies that were dissolved and who had defaulted on wages returned as directors of other companies in due course.

Types of unpaid wages include failure to provide holiday pay, unpaid hours of work and unauthorised deductions. Other types include not paying the last wage (or outstanding holiday pay) or ceasing to pay when insolvency was likely.

The researchers also looked specifically at London. The arts, entertainment and construction are big employers in London and they featured prominently in London Employment Tribunal cases involving unpaid wages. The report shows that London displays both the lowest and highest proportions reporting no paid holidays: 2.5% in Central London, 8.7% in Outer London.

Middlesex University researchers used the following sources to gather data on this subject: Labour Force and Family Resources surveys, lists of National Minimum Wage offenders, Insolvency Service data (secured through Freedom of Information requests) and Employment Tribunal judgements. In addition the Gangmasters Licensing Authority, Barnet Citizens Advice Bureau, Lambeth Law Centre and the Chartered Institute of Payroll Professionals all permitted access to survey or casework data. A series of case studies (mostly from London) were also used to illustrate the stories behind non-paid wages.

The Unpaid Britain project was established at Middlesex University Business School in September 2015 and is co-funded by the Trust for London. The final report is due in November 2017.