Today local MP and Employment Relations Minister Jo Swinson announced a Coalition Government crackdown on companies who underpay their staff.
New research from the Department for Business, Innovation and Skills (BIS) reveals that companies who pay less than the National Minimum Wage risk huge damage to their business through loss of reputation, low staff productivity and high employee turnover. The findings come as the Government begins to ramp up its scheme to ‘name and shame’ employers who break the law and pay their workers below the National Minimum wage.
Commenting, Jo said:
“Most employers are responsible and pay their staff properly but we have to crack down on those few rogue companies who are not doing the right thing and breaking the law by underpaying their staff.
“Ignorance is no excuse. Employers should be well aware of the different rates for the National Minimum Wage depending on the circumstances of their workers. If they are unsure, they can call the Pay and Work Rights Helpline on 0800 917 2368 or visit www.gov.uk for free advice and information.
“Employers who fail to pay workers the right amount will face a financial penalty, be publicly named and shamed and may even be prosecuted. Today’s research also shows the impact on staff productivity and a business’ reputation of underpaying workers. Businesses can’t ignore this issue and stick their head in the sand.”
The survey found that:
- Eight out of ten people in Glasgow “would not use the services of a business if they found it paid less than National Minimum Wage”, while nine out of ten called those employers a “disgrace”
- Employers who do not comply with the National Minimum rate changes that came into effect on 1 October 2013 or fail to spot differences in their workers are at particular risk of a financial penalty and being publically named
- Advice is available to employers and workers from the free and confidential Pay and Work Rights helpline and at www.gov.uk.
- Underpaying staff was also found to breed resentment, low productivity and high employee turnover. More than seven out of ten workers would “not work as hard” if they knew they were underpaid, not surprising when 86% said they would actively resent their employer. The vast majority (79%) would seek other work.
The National Minimum Wage rates changed on 1 October 2013.
- the adult rate increased by 12p to £6.31 an hour
- the rate for 18-20 year olds increased by 5p to £5.03 an hour
- the rate for 16-17 year olds increased by 4p to £3.72 an hour
- the apprentice rate increased by 3p to £2.68 an hour
- the accommodation offset increased to £4.91
Employers are encouraged to notice the details; age, accommodation, travel time and uniform hire can all effect how much workers must legally be paid. The National Minimum Wage naming scheme now makes it easier for Government to name and shame employers who fail to comply with the law.
Employers can protect their business by calling the Pay and Work Rights Helpline on 0800 917 2368 or visiting GOV.UK for more information about the National Minimum Wage.
- Populus interviewed 2,014 GB adults online between 02 and 03 October 2013. Results have been weighted to be representative of all GB adults. Populus is a member of the British Polling Council and abides by its rules. For more information see www.populus.co.uk.
- Links to NMW naming scheme and new NMW rates press notices can be found on the Gov.uk site.
- NMW case studies:
- A Glasgow based call centre repaid over £5,200 to 91 workers following incorrect deductions from their pay.
- A Glasgow building company failed to increase the rate of pay to several of their workers when they reached 21 years old. They were ordered to pay arrears of £26,620 to 41 workers.
- A Glasgow garage failed to pay the applicable NMW rate to 2 workers. They were ordered to pay arrears of £17,399. Over £14,000 of this was paid to one worker.