Leicester Textile Firms Caught Underpaying

25 January 2019, 14:34 | Updated: 25 January 2019, 14:42

Clothing manufacturers have been forced to pay almost £90,000 to employees after failing to pay them the minimum wage.

A HMRC investigation found that over a six-year period 126 factory workers were paid wage arrears.

Since 2012, HMRC has investigated 93 textile industry employers, and in 24 cases found arrears of £87,158 owed to staff.

It said 14 investigations were ongoing.

The figures were provided in a letter to the Environmental Audit Committee (EAC) from Janet Alexander, HMRC director of individuals and small business compliance, as part of its inquiry into the sustainability of the fashion industry.

Committee chair Mary Creagh MP said: "It has been 20 years since the introduction of the minimum wage but in our inquiry we heard that underpayment is rife and goes hand-in-hand with a culture of fear and intimidation in the UK's textile industry.

"This must stop. We need Government action to end these 19th century practices in 21st century Britain."

A quarter of all of HMRC investigations found non-payment of the National Minimum Wage (NMW) occurred with an average of £900 being paid out to workers.

Ms Alexander's letter shows more than £1,350 has been paid in wage arrears to 10 workers following HMRC investigations - this is equivalent to more than three weeks' pay at National Minimum Wage.

In 2014/15 47 workers were back-paid a total of £23,450 and in 2017/18 this figure almost doubled with 42 workers being paid £42,787.

In the letter, Ms Alexander said: "None of these cases qualified for criminal prosecution, reflecting that a majority of NMW breaches are civil offences under the National Minimum Wage Act."

HMRC added the consequences of an employer breaching NMW conditions are that they must repay wage arrears back to workers, face penalties of up to £20,000 per worker and be publicly named.

Six of the 24 cases were factories with a Leicester postcode, HMRC said, which is home to the UK's textile industry and has been a topic of concern throughout the EAC's inquiry.

However, HMRC stressed the postcodes relate to where businesses are registered and said companies could be operating in a different location.

During a committee hearing in November, Paul Smith, head of product quality for online fashion retailer Missguided, said two of his employees were allegedly assaulted in the last 18 months, while scoping out potential manufacturers in the city.

Mr Smith said underpayment of employees in some factories was "usual".