Five per cent of UK workers did not receive any paid holiday entitlement last year, according to new labour market analysis, as experts called for more to be done to improve employees’ rights.
The analysis of ONS data and government, conducted by the Resolution Foundation, found that nearly half (47 per cent) of workers receiving no holiday entitlement were on zero-hours contracts.
Workers at either end of the age spectrum were also disproportionately affected, with more than one in five of those who reported receiving no holiday entitlement either under 25 or over 65 (11 per cent and 17 per cent respectively).
Lindsay Judge, senior economic analyst at the Resolution Foundation, said the figures showed that labour market violations remained “far too common, with millions of workers missing out on basic entitlements”.
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She said: “Our analysis suggests that while violations take place across the labour market, the government should also prioritise investigations into sectors like hotels and restaurants, along with firms that make large use of atypical employment contracts, as that’s where abuse is most prevalent.”
Charles Cotton, performance and reward adviser at the CIPD, noted that it was “important that the government improved employee awareness of their existing pay rights”, and suggested that a high-profile effort was needed to help workers understand their rights.
“This will help those entering, or already in, the labour market to know what they should get and what they need to do if their employer is breaking the law,” he said.
The analysis, which looked at the Annual Survey of Hours and Earnings and the Labour Force Survey – both from the ONS – and the Family Resources Survey conducted by the Department for Work and Pensions, also found that a fifth (23 per cent) of workers on or earning just over the minimum wage were reportedly earning less than the legal minimum.
Workers aged 25 and under are more than twice as likely to be underpaid the minimum wage than any other age group, and while underpayment was most likely for workers in small businesses, almost a quarter (23 per cent) of those earning close to the minimum wage who reported underpayment were in firms employing 250 people or more.
Paul Ryman, partner at law firm Gunnercooke, said there were “potentially very serious consequences” for employers failing to award their workers their legal holiday entitlement or pay the national minimum wage.
“In terms of holiday entitlement, workers can claim for unpaid holiday pay dating back up to two years,” he said. “In relation to failure to pay the national minimum wage, this can result in a criminal conviction, being publicly named by the government, as well as being required to pay arrears in pay and being fined up to £20,000 per underpaid worker.”
Large corporations have come under scrutiny previously for not complying with national minimum wage regulations, including supermarket Iceland, which could face a £21m bill over a salary sacrifice scheme that resulted in workers being underpaid. Enforcement work by HMRC last year also led to a record 200,000 cases of workers not receiving the minimum wage being identified.
Additionally, in the Resolution Foundation’s analysis, 9 per cent of UK employees reported that they did not receive any payslips in the years 2016-18. While this was a particular problem in small firms – 17 per cent of employees who reported not receiving a payslip worked in companies employing fewer than 20 people – a similar number (16 per cent) came from organisations employing more than 250 workers.
New legislation came into force in April this year, extending the statutory right to receive an itemised payslip to all workers, making it easier for individuals to know if they are receiving the right level of pay, pension and holiday entitlement.
The government is currently consulting on the creation of a single body to enforce labour market rights, a move welcomed by the Resolution Foundation. But Judge called for this body to be adequately “empowered and resourced” to manage the scale of the problems highlighted in the report.