UK workers on minimum wage underpaid by £10.9m last year

Underpayment affected nearly 100,000 employees, according to government spokesperson.

Nearly 100,000 UK workers on the national minimum wage were underpaid by a record £10.9 million last year, a junior minister has revealed.

The shortfall emerged in response to a parliamentary question posed by shadow home secretary Lyn Brow to Greg Clark, secretary of state for business, energy and industrial strategy (BEIS). It follows the publication of a report by the Joseph Rowntree Foundation in September last year on the causes of, and solutions to, poverty in the UK.

In light of the report, Brown asked whether Clark would be willing to assess the potential merits of implementing the Low Pay Commission’s operational and compliance proposals in full.

BEIS parliamentary undersecretary Margot James responded that the government “carefully considers all Low Pay Commission recommendations”, which included areas identified in the Foundation’s report. But she failed to say whether they would be acted upon or not.

Instead James said the government had introduced tougher penalties for non-compliance with minimum wage regulations (NMW) in April last year. She added that there was currently a record £10.9 million in payment arrears due, which affected a total of 98,000 employees.

Underpayments that took place after April 2016 are subject to penalties of 200% of the value of the arrears but are capped at £20,000 per worker. Funding for enforcement activities is also due to be increased from £20 million in 2016/17 to £25.3 million in 2017/18.

But this is not the first time that the issue of NMW underpayment has been brought to light. According to recent research by Middlesex University, UK workers lose nearly £3 billion per year in unpaid wages and holiday pay, with recruitment agencies being the worst offenders.