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Companies underpaying workers are named and shamed

One of New Labour's flagship policies, the national minimum wage had not always had cross-party support

Popular with workers but not universally appreciated by employers, the national living wage (NLW) has been in the headlines, with the government naming and shaming companies that have been systematically underpaying their staff.

Such is its popularity with workers, however, that it has now been embraced by parties of all political hues – to such an extent that it was last year renamed the national living wage and increased to £7.20 an hour.

The arguments for the NLW are fairly clear. It guarantees a basic wage for workers, providing them with a degree of financial security. Extra money in their pockets is good for the wider economy and helps to limit the amount of in-work state help workers need.

The counter-arguments are just as clear. Many employers believe that it reduces the numbers of workers they can employ, increases expenses, and ultimately compromises their business’s profitability.

When the rise in the NLW was announced last year, there were numerous reports that some major employers would seek to circumvent the extra costs either by reducing staffing levels, cutting back on hours, or slashing overtime and benefits. There have, of course, been one or two high-profile instances where companies were found to have underpaid staff, with Mike Ashley’s Sports Direct perhaps garnering the most lurid headlines for its practices. These stories were naturally thrown into sharp relief when other large companies, such as Lidl, announced that they would henceforth pay all staff more than the NLW.

The government has now stepped into the fray, with the Department for Business, Energy and Industrial Strategy publishing a list of employers found to be underpaying their personnel. Department store Debenhams was probably the most surprising entry on the list; however, the sheer volume of offenders – 360 of them – is what raised most eyebrows.

The businesses in question had used such techniques as tips to top up wages, charging staff for their uniforms, and effectively billing them for staff functions such as the annual Christmas party!

Underpaying companies have been forced to pay back what they owe their employees and have been issued with a punitive fine. In total, these businesses were required to pay some £995,233 to employees and fines totalling £800,000 to the government.

The message seems to be that the underpayment of workers will not be tolerated and companies – irrespective of size – that fail to comply with their legal obligations can expect serious consequences.

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