U.K. Urged to Get Tougher on Firms Not Paying Minimum Wage
U.K. companies paying less than the minimum wage should face harsher penalties, the Resolution Foundation says.
(Bloomberg) --
U.K. companies paying less than the minimum wage should face harsher penalties as evidence mounts that an increasing number of them are flouting the law.
That’s the view of the Resolution Foundation, which said in a report published Wednesday that around one in four people earning around the legal pay floor -- currently 8.21 pounds ($10.80) an hour for over-25s -- was underpaid last year.
With the minimum wage set to keep rising, the economic incentives to break the law are increasing, the think tank warned. The government plans to lift the rate to match two thirds of median earnings, the equivalent of 10.50 pounds, more than doubling the number of people covered by 2024.
Violations are common partly because workers on low incomes find it hard to defend their rights. Boris Johnson’s Conservative government has sought to address the problem with proposals to create a single enforcement body.
But sanctions for wrongdoers are woefully weak, according to the Resolution Foundation. HMRC, the U.K. tax authority, has the power to levy penalties of as much as 200% of wage arrears owed, yet the average fine in 2017-18 was only around 90%. Underpaying firms face only a one in eight chance of being caught, and the detection rate for small firms is almost certainly far lower.
To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint
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