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Business & Finance Series: Expert Comment

Professor Chris Rowley comments on the Minimum Wage Review

Government review ‘names and shames' 233 organisations for not paying the national minimum wage.

by Kyla Njoku (Senior Communications Officer)

Chris Rowley, Professor Emeritus of Human Resource Management at Cass Business School said:

“Once again employers - well over 200 this time - have been caught depriving their staff of their correct minimum wage - which has been around for decades and is well-publicised, so ignorance or admin over-sight are poor excuses. Indeed, if these are actually the cause of the problem, the use of a good, professional HR manager or consultant would be an easy and good way to tackle it. However, I fear too many lazy managers make deliberate decisions that are not only illegal but also show their lack of morals, ethics and care towards their staff as they dodge legal payments and operate as ‘Scrooge employers’- which undercuts competitors in a downward spiral to be the worst payer.

“This time more than 13,000 low paid workers will receive about £2 million in back pay they have been swindled out of with employers receiving a record £1.9 million fine. Argos was the worst offender - and by some margin – as it underpaid over 12,000 workers close to £1.5 million. Sainsbury's, who flagged the error in February, said the amount was actually £2.4 million for 37,000 people when taking into account both current and former staff.  To put this in context the total reward package of Sainsbury’s boss was £2.8m (2015-16) and was forecast to increase with the Argos acquisition while in contrast the maximum hourly rate for the minimum wage is just £7.50 or £300 for a 40 hour week and drops to as little as £3.50 or £140 for a 40 hour week – see list below.

“Worryingly this plague of poor payers may well only be the tip of the iceberg - research from the TUC suggests there are at least a 250,000 workers being cheated out of the minimum wage. Also, while the spotlight of poor publicity and reputational impact clearly has a role to play and can act as some deterrent – hence Sainsbury’s retort - the problem is many offenders are small, with retailers, hairdressers and hospitality firms the worst industries for under-paying staff. The power of the poor reputation spotlight falling on them has much less deterrent impact on them I fear.”

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