Unpaid Britain: wage default in the British labour market

Employers withholding billions of pounds from workers in Britain

At least 2 million workers in Britain are losing over £3 billion in unpaid holiday pay and wages a year say Middlesex University London researchers in the final Unpaid Britain report* released today (30/11) and funded by Trust for London.

The report, Unpaid Britain: wage default in the British labour market, will be launched at an event in Conway Hall, London from 9am to 1pm on Thursday, 30 November. Key speakers include representatives from Unite, the CBI and Trust for London.

According to the report not paying wages, withholding holiday pay or workers “losing” a couple of hours’ money a week are some of the methods employers are using in a deliberate strategy to boost their profits.

The research team, led by Nick Clark from Middlesex University, analysed employment tribunal judgement data, Labour Force and Family Resource surveys, case studies and interviews to reveal a Britain where millions of workers are systematically losing out on wages while employers rarely face penalties. Furthermore consequences for non-payment are so weak that they do not present a sufficient deterrent to employers with many continuing to reoffend.

Employers use a number of regular and systematic tactics to withhold money from workers, including:

  • Failing to pay accrued holiday pay on workers’ departure.
  • Workers regularly “losing” an hour or two per week in pay.
  • Employers disappearing while owing wages (known as “knocking” in the construction industry).
  • Employers dissolving a company which owes wages in order to start up afresh with a new company (“phoenixing”).
  • Dispute over the interpretation of contracts, for example the payment of travelling time for care workers.
  • Building up arrears in pay keeping workers in place when they might otherwise move on to other jobs, so the practice is effectively labour hoarding.
  • Charging workers for uniforms or other necessary items in order to be able to perform their duties.

Commenting on the report lead author, Nick Clark, said: “The Unpaid Britain project has taken over two years to complete and has revealed an ugly side to employee/employer relations in this country – a nation where the idea of a fair day’s wage for a fair day’s work is only an aspiration for so many workers.

“Well-known brands and employers routinely use underhand and unfair methods to withhold payment. One fashion retailer used to make staff repay the company for clothes they were obliged to wear at work. The fact that such practices are widespread can only mean that withholding wages in some form is a deliberate business model for many employers.  Interestingly employers who don’t pay national minimum wages often blame affordability and yet 90% of London employers on the list of national minimum wage offenders, far from resorting to insolvency, remain active.

“This final Unpaid Britain report provides evidence of wage default on an industrial scale. Current means of redress fail our key test in that workers often do not receive what they are owed, while employers can offend repeatedly. Both effective enforcement and stronger unions are needed to give confidence to workers that they do not have to accept this.”

Unpaid wages in the London labour market coincided with the increase of in-work poverty in the Capital. According to the latest London Poverty Profile, 58% of Londoners in poverty are actually in a working household, a proportion which is described as “an all-time high”. For workers in these circumstances, even small reductions in what is paid to them can have catastrophic consequences.

Commenting on Unpaid London, Bharat Mehta CBE, Chief Executive at the Trust for London, said:

“The fact that some employers are withholding wages is totally scandalous because quite simply, it is wrong, and because many of the employees who are missing out are low-paid and already struggling.

“The number of people who are in-work and in poverty is at an all-time high. Millions of people are working hard but still cannot make ends meet. An important part of the solution is making sure that workers are at least getting paid for the work that they do. That should be the minimum anyone in this country can expect. We need stronger action from HMRC and government on this issue.”

Key recommendations from the report include:

  • Making HMRC responsible for paying workers identified NMW arrears, and then collecting them from the employer.
  • Developing systems for informing student workers of their rights, and assisting them in their enforcement.
  • Requiring employers to deposit a financial bond or take out insurance to guarantee workers’ wages.
  • Introducing deterrent penalties for employers’ failure to provide paid holidays or payslips.
  • Stronger sanctions against directors considered to have deliberately failed to pay
  • Empower unions to take up cases on behalf of groups of workers (for example challenging sham self-employed contracts).

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

-Ends-

Contacts:

Nick Clark: n.clark@mdx.ac.uk, 020 8411 4015, 07932 590282

Franca Tranza: Senior Media Officer (Research), f.tranza@mdx.ac.uk, 0208 411 4316 (out-of-hours diverted to mobile).

Navprit Rai: nrai@trustforlondon.org.uk or 07912 177 179

Notes to editors:

*Click here to access the full report and here to read the Executive Summary.

About Middlesex University London

For nearly 140 years Middlesex University (London) and its predecessor institutions have been home to innovators and change-makers. We are a progressive London university that puts our students first and provides expert teaching informed by inspiring research and practice.

We boast a diverse, multinational and multicultural community of 19,400 students and 1,900 staff from 140 different countries based at our modern north London campus. We also have campuses in Dubai, Mauritius and Malta, bringing our total number of students to 37,000. Middlesex University London generates more than £280 million a year for the Barnet economy, supporting some 3,800 local jobs.

We work with employers to make sure that what our students learn is what employers need, and we strive to transform the lives of our students so that they have an excellent experience while they are with us, and a solid foundation for inspiring careers when they leave us.

For more information go to www.mdx.ac.uk.

About Trust for London:

Trust for London is an independent charitable foundation. We aim to tackle poverty and inequality in London and we do this by: funding voluntary and charity groups – each year we make grants totalling around £7.5 million and at any one time we are supporting up to 400 organisations; funding independent research; and providing knowledge and expertise on London’s social issues to policymakers and journalists.

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Results from the future of therapy survey

Our colleague at Middlesex University Elizabeth Cotton published the results of a national survey of working conditions in mental health services, last week.

She noted that “The survey involved 1500 respondents, including 68 in depth interviews of frontline workers in mental health. The results are devastating. The website includes a range of data and anonymised quotes from mental health workers, as well as an eBook that looks at the future trends. The survey reveals a profound downgrading of services as well as a reliance on unwaged work and precarious employment conditions now widespread across the UK. The research outlines an impending crisis in the UK’s capacity to deliver quality mental health services.”

The results for the survey and its infographics can be accessed on www.thefutureoftherapy.org

Unpaid Britain Report launch

On 30th November we will be publishing our final report and we will be launching it at Conway Hall on that day, from 9am to 1pm. We will be discussing our understanding of how and why unpaid wages come about, and some preliminary recommendations for what could be done to tackle the issue. This is an open invitation to anyone who would like to attend. If you are interested in attending please register using Eventbrite as places are going quickly!

Programme

Time  

 

09:00-09:30 Registration & Breakfast
09:30 Welcome & introduction Chair: Jo Seery (Thompsons Solicitors)

Stephen Syrett (Business School Director of Research, Middlesex University)

09:45 Outline of findings Nick Clark and Eva Herman (Unpaid Britain project)
10:10 Responses Bharat Mehta (Chief Executive, Trust for London )
Diana Holland (Asst General Secretary, Unite the Union)
Matthew Perceval (Head Employment Policy, CBI)
10:25-10:30 Personal testimony Hospitality worker
10:30 Questions, discussion
10:45 Break
11:00 The future of enforcement Sir David Metcalf (Director of Labour Market Enforcement)
11:10 Access to justice Prof. Nicole Busby/Ele Kirk (Strathclyde University)
11:20 Questions, discussion
11:30 Report recommendations Nick Clark
11:40-12:25 Discussion of recommendations in working groups All participants
12:25 Closing remarks Jo Seery, Thompsons Solicitors
12:30-1pm Lunch

 

Speakers:

Sir David Metcalf was appointed the UK’s First Director of Labour Market Enforcement in January 2017. He is Emeritus Professor, Centre for Economic Performance at the LSE. Previously he was a founder member of the Low Pay Commission (1997-2007) and the first chair of the Migration Advisory Committee (2007-2016).

Bharat Mehta CBE is Chief Executive of Trust for London. Prior to taking up this post he was Chief Executive of the National Schizophrenia Fellowship (NSF, renamed RETHINK). He has also worked for the Medical Research Council; the National Council for Voluntary Organisations; and the Social Services Department of the London Borough of Waltham Forest. He is a board member of a number of organisations including: Home Group, one of the largest registered social landlords in the country; London Funders; and the Social Justice and Human Rights Centre Ltd. He has also served on numerous government and civil society commissions and advisory groups.

Stephen Syrett is Professor of Local Economic Development and Director of Research at Middlesex University Business School. He specialises in issues of urban and regional economic development, governance and policy and the study of ethnic minority, home-based and social enterprises and the regeneration of deprived areas. He has published widely on these topics including a number of books and many journal articles and reports. He has worked extensively with national, regional and local government bodies in the UK and internationally, as well as with a wide range of voluntary and community sector and private sector organisations.

Nicole Busby is Professor of Labour Law at the University of Strathclyde. She teaches and researches in the areas of equality and employment law, European social rights and access to justice in the employment tribunal and has published widely. She is currently a member of the Scotland Committee of the Equality and Human Rights Commission.

Eleanor Kirk is Ailsa McKay Post-doctoral fellow at Glasgow Caledonian University.  Eleanor’s research interests encompass the nature of work, employment relations, access to justice and social equality. Her current work focuses on employment rights enforcement, precarious work and ‘bogus’ self-employment. Additionally, Eleanor is a research associate at Ulster University Law School where she is working on the project: “Litigants in Person in Northern Ireland.” https://www.ulster.ac.uk/faculties/social-sciences/schools/law/research/litigants-in-person

Matthew Percival has been representing the CBI’s 190,000 member companies on employment issues since 2011 and is the Head of the CBI’s Employment Policy team, leading on issues ranging from employment law, pay and pensions, to immigration and diversity.

Diana Holland OBE is the Assistant General Secretary of Unite the Union and the current treasurer of the Labour Party. At Unite she is responsible for transport, food and equalities. She is also a long-standing member of the TUC Women’s Committee and serving as Vice-President of the Global Trade Union Confederation. She was awarded an OBE in 2001 for services to Equal Opportunities in Employment.

Address for event:

Conway Hall

 25 Red Lion Square,

London

WC1R 4RL

 To attend please register with Eventbrite any question email Eva Herman:  e.herman@mdx.ac.uk