Research and analysis

Non-compliance and enforcement of the National Minimum Wage: September 2017

This report by the Low Pay Commission considers the scale and nature of non-compliance with the National Minimum Wage and National Living Wage.

Documents

Non-compliance and enforcement of the National Minimum Wage - September 2017

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Non-compliance and enforcement of the National Minimum Wage - September 2017 - Summary Report

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Details

Non-compliance and enforcement of the National Minimum Wage - September 2017

This report contains the Low Pay Commission’s analysis of the scale and nature of non-compliance with the National Minimum Wage (NMW) and National Living Wage (NLW), and its assessment of the Government’s enforcement activities. Also included is a summary report containing the most important charts and analysis.

Findings of the report include:

  • Underpayment is highly seasonal throughout the year. It is highest immediately after an uprating of the minimum wage, when as many as 1 in 5 low-paid workers (those paid at or below the National Living Wage) aged 25 and over may actually be paid less than they are entitled to. This may affect between 305,000 and 580,000 workers.
  • In the 3 to 6 months that follow an uprating of the minimum wage, levels of underpayment fall significantly. We estimate that underpayment fell to 13% of workers paid the National Living Wage aged 25 and over 6 months after the NLW’s introduction. This is slightly lower than the 14% of workers underpaid 6 months after the uprating of the National Minimum Wage to £6.50 in October 2014.
  • Underpayment of the National Living Wage and Minimum Wage is very difficult to measure. Statistics are difficult to interpret and the worst cases of exploitation of workers are almost certainly hidden.
  • A large number of salaried workers (those who are paid monthly and don’t have a stated hourly rate) are paid less than the minimum wage. They make up 11% of people paid at the NLW but 44% of those paid below it.
  • Recent developments in the Government’s enforcement of compliance, and communications regarding the National Living Wage have led to real successes – record numbers of underpaid workers and arrears have been identified. Government enforcement investigations found arrears of £10.9 million for 98,000 workers in 2016/17 compared to £3.3 million for 26,300 workers in 2014/15. But there are areas where the Government could go further. The Low Pay Commission (LPC) makes several recommendations in this regard.

Enforcement of the minimum wage

  • The Department for Business, Energy and Industrial Strategy (BEIS) is responsible for minimum wage compliance and enforcement policy and HMRC enforces the NMW Act on behalf of BEIS.
  • Workers can complain about underpayment and seek redress by contacting ACAS, which operates the Pay and Work Rights Helpline. The phone number of the Helpline is 0300 123 1100.
Published 17 September 2017
Last updated 29 September 2017 + show all updates
  1. Summary report uploaded.
  2. First published.