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UK workers missing out on at least £1.5bn holiday pay every year
Every year, workers in the UK are being ‘cheated’ out of at least £1.5bn of holiday pay which they are legally entitled to. A new report titled ‘Unpaid Britain’ by a research group at Middlesex University business school found that one in 20 workers are not being given statutory holiday pay while one in 12 do not receive a payslip which is required by law.
The report comments on the widespread problem of employers failing to pay basic wages and a lack of enforcement means they generally get away with it too. Lead researcher, Nick Clark, said; “We’ve focused on the so-called gig economy and zero-hours contracts, but the much more pervasive practices of employers who simply pocket workers’ wages have continued largely unremarked,”
The research used statistics from employment tribunals, Citizens Advice and the Insolvency Service to collate data about this widespread problem of unpaid wages and the effects it has on workers up and down the country. Latest figures from food banks suggest that 23,000 emergency food parcels are given out yearly due to workers not been paid their wages.
The five sectors in which this sort of practice is most common include: food and drink, temporary agency work, recreation and amusement, the hotel trade and personal services such as dry cleaning and hairdressers.
The report also found the two ways employers mainly use when they are cheating money out of their staff. They are:
- Cheating little and often to make a significant financial gain when staff work variable hours and have no payslips. It can be difficult for workers to keep track of hours worked and prove what they are owed so this can usually go undetected for a long time.
- Bosses deferring pay as they claim the business is struggling before repeatedly entering into administration before staff receive their pay. Many phoenix businesses, born out of a previous administration, are wound up due to debts owed to workers and HMRC; the business then reappears with same or related directors/premises under a different name.
UK workers are entitled to paid holiday, currently 28 days every year for full time workers, under the European working time directive. For those working on variable hours contracts, this equates to around 12.07% of average pay but many are not aware they are entitled to it and are only paid if they challenge their employers. Currently, employers do not receive a penalty for failing to pay this to their staff.
Cuts to legal aid, the rising costs of court and tribunals and the protection which is offered to directors via limited liability is making it difficult for workers to recover their unpaid wages. All of these factors have resulted in a 67% drop in the number of workers taking their employers to court regarding unpaid wages over the last four years.
Until there is more support from the government with clear legal standpoints, employees are likely to find it difficult to successfully battle this sort of behaviour in court. It is clearly a big issue, especially when many households are struggling with money, and it is a problem that is widespread across a variety of different sectors and working contracts.