Underpayment not reported due to ‘fear and insecurity’

Job insecurity and a ‘poisonous’ workplace culture leaves workers trapped in poor-quality jobs and vulnerable to exploitation, according to a Low Pay Commission (LPC) report on non-compliance and enforcement of the national minimum wage in Leicester’s textiles industry.

Multiple agencies have carried out large-scale joint enforcement operations in Leicester since 2020, in response to repeated reports of exploitation and minimum wage underpayment.

The LPC, which heard evidence on what was driving non-compliance and what enforcement bodies found, found a disconnect. While enforcement bodies found relatively modest non-compliance in Leicester, the LPC spoke to others who believed rule-breaking to be widespread and flagrant.

LPC chair Bryan Sanderson said: “The evidence we heard from workers in Leicester was striking. Despite some positive recent progress, job insecurity, a poisonous workplace culture and low expectations leave workers trapped in poor-quality jobs and vulnerable to exploitation. These same factors mean they are unlikely to report abuses, which undermines efforts to enforce workers’ rights.

“The case of Leicester is not unique. Across the UK, workers in precarious positions face the same obstacles, with the same consequences for enforcement.

“The problem demands comprehensive action, including to give these workers greater security over their hours and incomes.”

After hearing evidence from workers, retailers, supply chain auditors, manufacturers, local government and enforcement officers, the commission said that recent changes in the textiles industry suggested that some evidence of underpayment may be historic and so less reflective of current situation.

But it found that the vulnerability of workers makes them more reluctant to provide information, and that there remains potential for employers to conceal underpayment from investigating bodies.

Commissioners made several recommendations for government:

• The process for reporting abuses does not work for the most vulnerable low-paid workers and fails to engage the third-party bodies whom workers may trust more, or wider industry networks. They recommend HMRC looks into ways to address these problems
• There is an ‘information gap’ between what industry and civil society groups think they have reported to official bodies, and what those official bodies are able to share and act on
• Insecure work and uncertainty over hours and incomes are central to the vulnerability of workers to exploitation.

For this final point the LPC urged the government to act on recommendations it made around “one-sided flexibility” in the wake of the Taylor Review five years ago.

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These included a right to switch to a contract which reflects normal hours, a right to reasonable notice of work schedules, and a right to compensation for shift cancellations made without reasonable notice.

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