Wages Council Orders Enforcement (Hansard, 28 January 1986)

§ Mr. Peter Pike (Burnley)

I beg to move, That leave be given to bring in a Bill to provide for the automatic prosecution of and the publication of the identity of employers who pay their employees wages below wages councils' statutory minimum rates.

I should like to express my thanks to my union, the General, Municipal, Boilermakers and Allied Trade Union, for its help in preparing this Bill and the case for it, and also to my hon. Friend the Member for Jarrow (Mr. Dixon) who has a considerable interest in the Bill. I recognise that the Bill proposes to strengthen the role of wages councils when, regrettably, the Government have chosen at this time to move in the opposite direction.

Most workers in the United Kingdom have a direct influence on their pay levels by means of negotiation and voluntary agreement between their employers and their trade unions. Even in such cases, unfortunately, some unscrupulous employers, such as Silentnight, break agreements and treat their employees in an appalling way. This Bill deals with those who work in industries where it is difficult to establish collective bargaining agreements, and where workers depend on minimum wages and conditions as laid down by wages councils. At present some 2.75 million workers in over 325,000 establishments are protected by wages council provisions.

My union has always fought hard for lower-paid workers, and will continue to do so. Wages councils have existed in one form or another since 1910. There are now some 25, the largest being in the hairdressing, hotel and catering and retail trades. but there are others which are also very important. It is important to acknowledge that those workers are in low-paid industries, which makes it all the more appalling that some employers fail to pay the minimum wage rates. I must stress that those workers are very often in very low-paid jobs.

To put it in perspective, at 7 October 1985 wages in the hairdressing industry were £50.25 a week, in the makeup and textile industry £60.64, and in the hat, cap and millinery industry £60.84. All the other figures show a similar, appallingly low wage level. They are extremely low wages, to put it mildly—and one could be tempted to put it much more strongly than that.

Many workers in industries covered by wages councils are women whose income is essential to the family. It is crucial that the system works on their behalf and that they get at least the minimum wage fixed by the wages council. It is true to say that many are afraid to complain to the wages council inspectorate as they fear unfair dismissal. Working in small units, they feel isolated and are fearful of pressing for their legal entitlement and just right.

At present, it is easy for the unscrupulous employer to get away with cheating his employees of the wages to which they are entitled. The number of wages council inspectors at December 1984, when the inspectorate had been reduced by one-third since 1979, was 222. It stands to reason that the inspectorate cannot control and check 325,000 establishments with only 222 staff. In 1982, only 6 per cent. of those establishments were inspected, but that figure is misleading as only 40 per cent. of that 6 per cent. actually received a visit. Other employers were asked to confirm by questionnaire that they were not guilty of illegal underpayment. What nonsense to ask the employer to make the return himself. 817 In 1984 the percentage of those visited improved—it was 6.9 per cent. of the total. That still means that an employer can expect to be visited on average only once every 15 years. Therefore, the risk of being caught is minimal and the attraction to break the law is substantial.

Those key figures of establishments visited in 1984 having been given, it has to be said that 35.6 per cent. of those establishments were found to be guilty of underpayment. It is interesting to note that, as a result of inspection by visit, 12.2 per cent. of all the workers involved were being underpaid and exploited. The number of those checked by all methods, including visits and the return of the questionnaire, totalled 4.4 per cent. From the figures I have given, it can be seen that the responses to the questionnaire confirm an unbelievably low rate of people being underpaid, and this is understandable because, when the guilty are asked to submit their own forms, obviously they will not tell the truth.

Under the Bill it would be essential to have more checks, an enlarged inspectorate and more visits. It is reasonable to assume that a proper inspection, if it were carried out, would prove that the number of workers being underpaid was in the region of 12.2 per cent.

In 1984 the arrears assessed were £2.5 million. That is the amount of money out of which employees have been cheated by their employers. I would go further and say that it was stolen by the employers. The true figure is likely to be three times that amount—money stolen from some of the lowest paid workers in the country. It is time that action was taken to protect them.

What happens to employers who are guilty when they are found out? The answer is, very little. In 1983, of employers at some 9,842 establishments found to be breaking the law, only two were prosecuted and civil proceedings were taken against another five. However, of the debt for underpaid wages exposed by the inspectorate, 25 per cent. was left unpaid by the employers.

818 The threat of prosecution is minimal even when employers are caught. The Bill aims to remedy that position. It provides for automatic prosecution in any case where the employer has been shown to be paying below the minimum wage rate fixed by the appropriate wages council. It also provides for the automatic naming of the individuals prosecuted. If they have committed an offence, they should be prosecuted. If found guilty, they should be named. That would be a genuine deterrent to prevent employers stealing money from their employees. If such bad employers were named, prospective employees would come to know of them. Their names should be on display in jobcentres so that they might be seen by those seeking jobs. Indeed, the names could also be on show in libraries, town halls and other public buildings.

Combined with an increase in the number of inspectors, the Bill will pose a serious threat to those employers who attempt to rob their workers in this way. I believe that the very threat of the Bill will herald a speedy end to this appalling scandal, and ensure that the workers in low-paid industries receive fair wages and conditions.