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Firms failing to comply with pay obligations face damage to reputation, says BIS

New research from the Business, Innovation and Skills (BIS) department has revealed that firms who fail to pay their staff correctly face serious damage to their employee productivity and their overall reputation. 

The research was compiled using opinions from more than 2,000 members of staff based across the UK and it follows Government plans to “name and shame” employers who fail to meet their legal obligations regarding employee pay.


Eight out of ten survey respondents said that they would “not use the services of a business if they found out it paid less than the minimum wage,” while the vast majority of those – eighty per cent – would also encourage family and friends to do the same. Nine out of ten respondents confirmed that employers who failed to pay their staff at least the minimum wage were a “disgrace”.


Jo Swinson, Employment Relations Minister, said that the Government was aiming to clamp down on employers who underpaid staff: “Employers who fail to pay workers the right amount will face a financial penalty, be publicly named and shamed and may even be prosecuted.”


“The research also shows the impact on staff productivity and a business’ reputation of underpaying workers. Businesses can’t ignore this issue and stick their head in the sand,” added Ms Swinson.


As of 1 October this year, the adult pay rates rose by 12 pence to £6.31 an hour, while pay rates for 18 to 20 year-olds rose by 5 pence to £5.03 an hour.


In related news, the UK living wage – which is the level of pay needed by an individual to be able to cover the basic costs of living – was also raised yesterday. The wage was raised by 20 pence to £7.65 an hour, which represents a £400 annual pay rise for low-paid employees across the country, according to the Living Wage Foundation.


The rate is worked out each year by the Centre for Research in Social Policy at Loughborough University and, although it is not mandatory for companies to pay it to their staff, and is higher than the legal minimum wage of £6.31 an hour, an increasing number of employers are signing up to pay it. The living wage is higher in London, at £8.80, a rise of 25 pence on last year’s total.


Labour leader Ed Miliband has pledged to roll out tax rebates for employers who do opt to pay the living wage to their staff, if the party is elected.

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