Newham Council, in partnership with GMB, today (24th March) publish a report called “Pay By The Rules” which demands that Government allows local authorities to use their local knowledge and expertise to tackle exploitative businesses who fail to pay the National Minimum Wage (NMW). The Labour Party has committed to local enforcement of the NMW being included in their general election manifesto and the report outlines how that can be achieved. The publication of the report coincides with the release by BIS of the names of a further 48 employers named and shamed by BIS for failing to pay the national minimum wage.
The employers in the GMB Yorkshire & North Derbyshire region named today (24 March 2015) are:
Mrs Yoko Banks, trading as Ashley House Hotel, Harrogate, neglected to pay £405.07 to 1 worker
The Widd Group Ltd, trading as Widd Signs, Leeds, neglected to pay £253.50 to 1 worker
Call & Deliver Ltd, trading as Pizza Hut, Heckmondwike, neglected to pay £163.45 to 9 workers
Central Electrical Ltd, Chesterfield, neglected to pay £130.28 to 1 worker
The report, Pay By The Rules, estimates that across the UK workers are losing £533million to employers who are ignoring the law. It highlights the negative impact on workers and law-abiding businesses as well as the failure of central government to tackle the problem. The report shows that, in Newham alone:
17 per cent of working residents are paid below the NMW
£38.2million is underpaid to workers every year
Underpaid workers lose an average of £2,260 per annum
However, Government figures show that:
From 2009 to 2014, there has been a 60 per cent reduction in businesses inspected by NMW enforcement officers at HMRC and since the start of this government , only two prosecutions have been brought against criminal employers.
The report is backed by Rt. Hon. The Lord Andrew Adonis, Councillor Richard Watts, Leader of Islington Council, Councillor Jim McMahon, Local Government Association Labour Group Lead, and Leader of Oldham Council, Adam Chircop, Head of HR for ExCel London, Nick Pearce, Director of IPPR, and John Burton, Westfield Director of Development and CIPD the professional body for HR and people development. The report is being shared with Government, HMRC, and business representatives and it is hoped that as part of the localism agenda the next government will promptly devolve these powers to local authorities, who are best placed to support their local residents.
Mayor of Newham, Sir Robin Wales said: “This report clearly demonstrates that central government has been woefully inadequate at protecting workers from exploitative businesses who, in the majority of cases, are wilfully breaking the law. Local authorities have the interests of their residents at heart, and are best placed to identify rogue businesses. We’re already aware of companies that flout licensing, planning, trading standards and waste rules and are able to take action. With additional powers to tackle underpayment of NMW, councils could make a substantial difference to residents’ lives. All we need is a government who are willing to act to improve the lives people nationwide.”
Paul Kenny, GMB General Secretary, said: “The national minimum wage is one of the most important workplace rights and more needs to be done to ensure all workers receive the pay to which they are entitled. Centralised enforcement is weak and currently fails to protect the lowest paid and most vulnerable. GMB welcome Labour manifesto commitment to implement Newham’s proposals for local authorities to be able to investigate and in turn prosecute employers who exploit their workers.”
The report has also been endorsed by leading politicians and business leaders including Shadow Business Secretary Chuka Umunna MP, who said: “This report makes a powerful case for giving local authorities a greater role in enforcing the National Minimum Wage. If Labour is elected in May we will act, giving local authorities new powers to tackle rogue employers. Under this government we’ve seen a failure to properly enforce the legal minimum and only a tiny number of prosecutions brought. As this report shows, there are real concerns that non payment is still far too commonplace. Labour local authorities like Newham are leading the way in tackling low pay. Councils must be given the tools and powers they need to beef up local enforcement and make sure everyone at work gets paid what they are entitled to under the law.”