One in 20 does not get statutory holiday pay, one in 12 does not get payslip and £1.2bn in wages are unpaid annually, says study

Employers are cheating British workers out of at least £1.5bn a year in holiday pay to which they are legally entitled, a study has found.



One in 20 workers report not being given statutory holiday pay, while one in 12 workers does not receive a payslip as required by law. A further £1.2bn of wages owed for hours worked are unpaid each year, according to a research group at Middlesex University business school in a report called Unpaid Britain.

Employers failing to pay basic wages are a widespread problem, but the weakness of enforcement means they can generally do so with impunity, the report says.



“We’ve focused on the so-called gig economy and zero-hours contracts, but the much more pervasive practices of employers who simply pocket workers’ wages have continued largely unremarked,” Nick Clark, lead researcher, said.

The impact on the low–paid can be severe. Food bank data suggests 23,000 emergency food parcels are given out a year because workers have not been paid their wages, according to the report.

Researchers used official statistics from sources including employment tribunals, the Insolvency Service, the Labour Force Survey, the ACAS conciliation service, and data from Citizens Advice to estimate the scale of deliberately unpaid work in the UK.

They also calculated an “index of employer delinquency” to identify the sectors where workers’ wages were most likely not to be paid in full. The worst five were: recreation and amusement activities; food and drink service; personal services such as hairdressing, nailbars, and dry cleaning; temporary agency working; and the hotel trade.

The Unpaid Britain group suggested that two types of cheating were prevalent. Where workers have variable hours and no payslips, employers are able to make a significant financial gain by cheating them a little and often, and it is hard for workers to keep track of hours worked or to prove what they are owed.



A separate pattern involved bosses deferring pay on the grounds that their business was struggling and then repeatedly going into administration before workers had been paid. The researchers found many phoenix businesses being wound up with debts owed workers and HMRC but then reappearing with the same or related directors and premises under a different name.

Citizens Advice experienced a doubling of cases of what it calls “wages theft” between 2014 and 2017, with about 9,000 workers asking for help in recovering deliberately unpaid wages, and 75,000 having problems with pay and entitlements in the last year.

The right to paid holiday in the UK – now 28 days a year for full time workers – was introduced as part of the European working time directive. For those with variable hours it is the equivalent of 12.07% of their average pay, but workers are often not made aware they are entitled to it or are only paid it if they challenge employers. There is no penalty on employers for failing to pay.

The report also highlights the barriers, such as tribunal and court fees, cuts in legal aid, and protection offered to employers by limited liability, that very often prevent workers recovering unpaid wages.

The number of individual workers taking employers to tribunal has fallen by 67% since the government introduced fees in 2013. Even when workers win at tribunal, they may still have to pay the costs of court enforcement orders and bailiffs where employers fail to pay up.

Facebook Twitter Pinterest Workers at fashionable Shoreditch branch of Beach Blanket Babylon restaurant calculated that collectively they were owed thousands of pounds in unpaid wages in May. Photograph: Bloomberg/Bloomberg via Getty Images

Case study

Workers at the fashionable Shoreditch branch of the celebrity restaurant Beach Blanket Babylon calculated that collectively they were owed thousands of pounds in unpaid wages in May.



Their payslips, which were made out in the name of Robert Newmark Restaurants, never seemed to match their own records of hours they had worked, they told the Guardian. They were supposed to be paid every 15 days, but the payslips would come at least 10 days late, and then the amount that actually went in to their bank accounts would be different again, making it hard to track.



Antonio Amato worked as a chef in the kitchen at the east London restaurant and told us arrears of his wages reached £800. Staff, who are nearly all young migrant workers, said the shortfall followed a pattern.



A group of them refused to work until they had been paid what they were owed. “They told us we don’t have any money, we can’t pay you. And now you have to leave,” Mido Rafet, a waiter who said he was owed hundreds of pounds, told us.



The shortfall in Amato’s wages meant he had to leave his accommodation because he could not keep up with his rental payments; others described similar crises over bills. The workers began protesting outside the restaurant and on social media, at which point the management agreed to negotiate, they said. Some were paid what they were due, but several were not.

The restaurant owners had been accused of the same behaviour before. In January another worker took Robert Newmark Restaurants to an employment tribunal with a very similar story. The judge found he was owed £2,000. The company did not attend the hearing.

Robert Newmark was interviewed 15 months ago by a property magazine at home in a lavish19th-century gothic mansion in Hampstead, north London, that he co-owns with his son Rex and other partners.

Together with another son, Brett, he controlled the Beach Blanket Babylon restaurants in Notting Hill’s Ledbury Road and Shoreditch’s Bethnal Green Road through a company called Rosslyn Hill Ltd when it went bust in 2014 owing HMRC more than £1m in unpaid PAYE, national insurance and VAT.



Robert Newmark had received payments of at least £267,000 from the company in its last six months, according to the government’s insolvency service. He had already been disqualified from acting as a director after the failure of a previous company trading as Beach Blanket Babylon, Frontmirror Ltd.

Directors of that company had taken substantial loans, and HMRC estimated it owed about £1m in taxes. In August 2016 Newmark was once again disqualified from acting as director or managing a limited company, this time along with his son Brett, for a combined eight and a half years. It is not illegal for disqualified people to continue to operate as sole traders.

A spokesperson for Beach Blanket Babylon said in a statement that there had been a delay in paying some wages because of cash flow problems caused by “unforeseeable trading events”. Protests by staff had exacerbated the problem by hitting trade, it added. “We would like to apologise to any staff who have suffered payment arrears and reaffirm out commitment to ensure everyone is paid in full.”

Staff told us some payments were made after the Guardian’s inquiries. Rafet said he had been paid most of the disputed money after our contact with the company, while Amato also received some but was still in dispute over holiday pay.