Up to 20% of minimum wage workers are underpaid
06 October 2017
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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