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Up to 20% of minimum wage workers are underpaid

04 October 2017 #Other

The Low Pay Commission, which advises the government on minimum wage levels, has released its annual report. The report stated that as many as 20% of workers may not receive the National Living Wage (the variant of National Minimum Wage for those aged 25 or over) immediately after a rate rise. This means that between 305,000 and 580,000 workers may not receive the wage they are entitled to by law. After a period of between three and six months, this drops to 13%.

Some other points of note from the report were:

  • Two-thirds of underpaid workers are female;
  • A large number of salaried workers (those who are paid monthly and do not have a stated hourly rate) are paid less than the minimum required by law – around 44% of the total number of people paid below the National Living Wage;
  • In 2016/17 enforcement investigations by HMRC found arrears of £10.9 million for 98,000 workers. This is up from £3.3 million for 26,300 workers in 2014/15;
  • The report estimates that HMRC will be responsible for monitoring 3.3 million workers from 2020, up from the 2.3 million currently monitored;
  • The government faces further difficulty in focusing its investigations, as 31% of underpaid workers are not in traditionally low paid roles.

It can be difficult to calculate if employees are receiving the National Living Wage, particularly if they receive non-cash compensation (benefits in kind) such as accommodation, which cannot be included for National Living Wage calculations. For any questions about the National Living Wage please contact our employment team.

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Michael Hibberd

Michael Hibberd
Senior Solicitor

E: mhibberd@clarkslegal.com
T: 0118 953 3905
M: 0779 900 7511