The government published on 21 June the names of 202 companies that have been fined for not paying their staff the minimum wage. Some were well-known names such as Marks & Spencer, WHSmith and Argos, but the majority are smaller companies. A total of 63,000 workers were, overall, £5mn out of pocket. On publication, the government said the naming sends “a clear message from government that no employer is exempt from paying their workers the statutory minimum wage”.
All the companies on the list have repaid the money owed. (Those which do not pay are usually prosecuted). The government also notes that “the investigations by His Majesty’s Revenue and Customs concluded between 2017 and 2019”; which begs questions about why it has taken so long, four years, to publication, and about the timing of publication.
Companies fined for failing to pay minimum wage
The ways in which these companies underpaid their workers were:
- 39% of employers deducted pay from workers’ wages
- 39% of employers failed to pay workers correctly for their working time
- 21% of employers paid the incorrect apprenticeship rate.
Of the 202 names companies, 180 owed under £20,000. The government lists the companies according to the total amount of money owed. So, WHSmith, is at number one having failed to pay a total of £1,017,693.36 to 17,607 workers – £57 per worker – and number two is Lloyds Pharmacy which failed to pay £903,307.47 to 7,916 workers – £114 per worker, or twice as much as number one.
Some of the companies have since filed for bankruptcy or are subject to ‘an active proposal to strike off’ (a way of dissolving a company, voluntarily or involuntarily).
Some companies and their branches or franchises (their status is unclear) appear to be repeat offenders. Delta, which appears to be a hotel business, has three breaches: in Basingstoke (£737.96 for ten workers); Leeds (£728.77 for eight workers); and Telford (£8,871.76 for 12 workers).
The companies that owed the most per individual worker were companies that underpaid a single worker. Elite Recruitment Agency (since dissolved) failed to pay £10,554.39 to one worker, while Faried Khan (the News Shop, Manchester) failed to pay £7,393.47 to another.
In the mid-range between the very small businesses and the large corporations there were companies that failed to pay significant sums to a sizeable number of workers. Chanel Limited of Croydon failed to pay £70,413.59 to 250 workers (£281 each) and 4 Site Security Services of Leeds failed to pay £36,388.31 to 170 workers (£214 each) – over half a week’s wages – although over what period is unclear.
Analysis of the companies involved
Company names often do not give a good indication of the type of business. A scrutiny of the names of companies that signal their purpose, suggest the worst offenders are children’s nurseries, restaurants, hair and beauty salons and, to a slightly lesser degree, car services, textiles and health clubs. In some cases, the amounts lost per worker are significant. Park View Health Clubs in London failed to pay £12,191.87 to four workers (£3,048 each) while the East Orient buffet restaurant in Warrington failed to pay £21,127 to eight workers (£2,641 each).
There is no evidence that the large well-established companies intended to break the law or to pay their staff below the minimum wage. According to the BBC, Marks & Spencer, WHSmith and Argos all said the underpayments were unintentional, the policies and processes that led to the underpayments had been rectified and any monies owed had been repaid.
WHSmith said “it had misinterpreted rules around uniforms, having asked staff to wear specific coloured trousers, skirts and shoes without reimbursing them for it”. Sainsburys, who have subsequently taken over Argos, said their breach was a technical “payroll error” while Marks & Spencer had failed to pay temporary staff all their wages in a timely manner. Marks & Spencer said that “Our minimum hourly pay has never been below the national minimum wage, it is currently above it and no colleagues were ever underpaid because of this”.
Corporate mentality towards wages and workers
While not deliberately breaking the law, these breaches reveal a corporate mentality towards wages and workers, and the potential scale of wage losses if not checked.
WHSmith may pay above minimum wage at £10.65 per hour (the minimum wage is £10.42) but was attempting to claw back the costs of doing so by requiring staff to pay for their uniforms. ‘Clawing back’ in this way or charging ‘expenses’ is a, not uncommon, device to save costs. It applied in 39% of the cases on the list.
Marks & Spencer pay £10.90 per hour and their breach of the legislation was a delay in making payments to temporary staff (they maintain it was an error). It may, however, be indicative of carelessness towards temporary employees, people working in insecure employment and those who have fewer protections.
Most companies, 180 (89%) of those named, owed a debt that was under £20,000. These seem to be comparatively small businesses. The number of employees affected, however, runs into thousands. As with the larger corporations some will arise from error, and perhaps is more likely in the absence of business and personnel support, but many were in sectors known for their worker exploitation.
Research shows there is often a continuum between slave labour, exploited illegal labour, exploited legal labour and minimum wage violations. Government inspectors are unable to keep on top of the problem and government policies, particularly in relation to refugees and immigration, create the conditions in which exploited labour thrives, for example in child and social care.
Most of those affected will not be represented by a trade union. Many, the most vulnerable to exploitation, will not speak English as their first language and they will be unaware of their rights. The government needs to do much more to ensure that those who are underpaid or exploited have ready access to advice and support. Publishing a ‘name and shame’ list, four years after the completion of the inspections, may assist in increasing our knowledge but will have no impact on the incidence of exploitative pay or working conditions.