HMRC’s prosecution rate has been branded as ‘pathetic’ after just six UK employers were prosecuted for paying employees less than the minimum wage in the past six years despite HMRC finding more than 6,500 violations
An investigation by OpenDemocracy also found that 58 companies that were named on the UK government’s ‘Rogue Employers’ list, for failing to pay the minimum wage also collected millions in furlough payments.
The investigation found that Pizza Hut claimed up to £5m under Coronavirus Job Retention Scheme (CJRS) in December and January after the company was publicly criticised for failing to pay their 11,000 workers almost £850,000.
It also found that Superdrug who claimed up to £3m, unpaid 2,222 workers £15,000 between 2012-2017 and food wholesaler Costco, who claimed £500,000, and failed to pay around £4,000 to 58 workers in over the same period.
According to figures by HMRC, more than 1m workers lost out of £100m in wages by their employers between April 2015 and March 2021. HMRC also said that the low number of prosecutions reflected a focus on taking civil action rather than using the courts to tackle businesses that do not pay the legal minimum wage.
Unite Union describe HMRC’s attempt as ‘pathetic’ and that more needs to be done to tackle it.
Gail Cartmail, assistant general secretary, Unite Union said: ‘The government’s do-nothing approach and the failure to prosecute companies guilty of such practices is effectively a green light to unscrupulous employers to continue to exploit workers by underpaying them’.
While HMRC can issue fines of up to 200% of what is owed to employees for minimum wage violations, OpenDemocracy found that, between 2015 and 2020, the average fine was just under 50% of wage arrears.
Only 13% of companies paying less than the minimum wage are caught by HMRC, according to research by the Resolution Foundation and using government data the Resolution Foundation estimates that there was at least 11,000 firms that underpaid their workers in 2018-19. HMRC only identified 1,456 of those employers.
The number of workers paid less than the minimum wage has risen more than 2m last year, according to figures from the Office for National Statistics (ONS). However, HMRC was able to return unpaid wages to only 155,000 workers which equated to around £16m.
In July, HMRC issued a reminder for individuals, particularly those who work temporary and seasonal contracts over the summer to check their pay as certain deductions or unpaid working time can reduce pay and take people below the minimum wage.
Steve Timewell, director of individuals and small business compliance at HMRC said: ‘We want to ensure that seasonal workers and students are being paid what they are entitled to and, as the economy reopens, help employers if they are unsure of the rules.
‘HMRC investigates every complaint made about the minimum wage, so whether you are selling sun cream, giving a hotel room a clean, or serving a strawberry smoothie, if you think you are being short-changed you should get in touch.’