1 in 4 Minimum Wage Earners Being Underpaid

January 9, 2020

Around one in four people who are aged over 25 and on minimum wage employment contracts are being underpaid, according to a new research report looking at these issues.

The Resolution Foundation think tank has said that the proportion of people who aren’t being paid what they should be has been on the rise since 2016 when the National Living Wage was introduced.

In 2016, it was estimated that roughly one in five minimum wage earners were being underpaid but that proportion has now increased to one in four.

The minimum wage is expected to rise faster than average earnings over the next few years but the Resolution Foundation has said that it wants to see more action taken to deter employers from underpaying their staff.

It is the job of HMRC to identify cases of underpayment and fine employers for any breaches of the relevant laws but it’s clear that a lot of companies continue to pay wages that don’t match up to the legal minimums they’re required to pay.

The Resolution Foundation says that HMRC should be hitting employers with significantly larger fines for breaches of minimum wage rules in order to deter them more effectively from carrying on with their low pay policies and practices.

According to the think tank, part of the problem is that employers who underpay their staff only face around a one in eight chance of being caught and punished for doing so.

“The welcome introduction of the National Living Wage in 2016 has led to a worrying rise in minimum wage underpayment,” commented Lindsay Judge, senior policy analyst at the Resolution Foundation.

“As the government plans to increase the legal wage floor through this parliament, it is essential to strengthen the incentives for firms to comply.

“The government can act today by encouraging HMRC to take a tougher line with minimum wage offenders and being given the power to levy larger financial penalties.”

For a lot of people, low wages lead to a reliance on debt, which can all-too often result sooner or later in situations of problem debt, spiralling repayment costs and serious issues with creditors.

If you’re finding it tough to cope with your personal debts or to fend off your creditors then it’s generally a good idea to get third party advice from debt help professionals as soon as you can.

Paul Barber

Head Adviser at our Manchester Office

Tel: 0800 001 4247
Email: enquiries@ukdebt.org.uk

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