Around one in 20 UK workers say they are not receiving any paid holiday allowance, a violation that costs Britain’s workforce as much in lost pay as illegally low wages, according to new analysis by the Resolution Foundation.
The analysis, based on official surveys, looks into breaches of the law that requires all workers except the self-employed to be given 28 days of paid leave a year, which can include the eight annual bank holidays. The 5 per cent share of short-changed workers is equivalent to about 1.5 million people.
A government report last year noted that there is effectively no state agency enforcing holiday pay regulations and cited evidence suggesting that the unpaid amount is equal to losses from violations of minimum wage rules.
Lindsay Judge, senior economic analyst at the Resolution Foundation, said: “The UK has a multitude of rules to govern its labour market – from maximum hours to minimum pay. But these rules can only become a reality if they are properly enforced.“Labour market violations remain far too common, with millions of workers missing out on basic entitlements to a pay slip, holiday entitlement and the minimum wage.”In 2017-18, HMRC found that a record 200,000 workers had been paid less than what is required by the National Minimum Wage and the National Living Wage, the think tank noted in its report. Workers must be paid the higher National Living Wage if they are 25 or over. The current rate is £8.21 per hour.
The analysis by the Resolution Foundation reveals that the risk of being short-changed on pay or holiday is closely linked to the worker’s personal characteristics, the type of their contract and their industry.
For example, workers aged 25 and under are almost twice as likely to be underpaid the minimum wage as any other age group.
One in seven workers in the hotels and restaurants sector say they receive no paid holiday entitlement, while one in six workers aged 65 or over report the same violation – more than any other age group.
Workers in firms that employ fewer than 25 people are most likely to miss out on paid leave, as are workers on zero-hours and temporary contracts.
The scale of labour law breaches may be even bigger as the Resolution Foundation points out gaps in available data.
Surveys miss out some important questions and workers are often unaware their employer is breaking the law or they may be reluctant or too frightened to report the truth, the think tank says.
Meanwhile, the HMRC findings on minimum wage underpayments are based on the number of firms that were caught and so also understate the true picture, the foundation added.