Channel 4 Dispatches Programme - Low Pay Britain

On Monday 19 January 2015 Channel 4 Dispatches aired a programme which revealed the reality of employment for many in modern Britain and the big British brands benefitting from complex schemes which allow them to save hundreds of millions of pounds on their wage bill.

Research for the programme, reveals that the Government’s positive headlines of rising employment figures belies a concerning reality, in which companies such as Tesco benefit from lower National Insurance contributions and agency workers at top online fashion brand ASOS can earn as little as £3.08 an hour.

30% of the jobs created since 2008 have been part time, but Dispatches reveals that half of the UK’s part time workers earn so little that they make no National Insurance contributions at all.

This puts workers’ future state pension in serious jeopardy, leaving them to face an uncertain future with the possibility of spending their retirement in poverty.

As the Conservatives put jobs and economic recovery at the heart of their election strategy, Dispatches investigated the Government’s claim that almost 2 million jobs have been created, and finds that the reality for many workers is that they are in highly flexible, insecure part time work, precarious self-employment, and ultra low pay.

One of the companies shown on the programme were Tescos who are the biggest private sector employer in Britain.

At a time whereby the company has been receiving its fair share of negative press they could of well done without this being aired.

The TV progamme highlighted that all customer assistant jobs being advertised on the Tesco website on one day showed 96% of the 785 posts were part time, sometimes just a few hours a week and earning contracted hours amounting to as little as £200 a month, Channel 4 Dispatches estimates that Tesco could save up to £100m a year in National Insurance contributions if staff worked their contracted hours only.

Channel 4 Dispatches also reveals that half of Britain’s part time workers aren’t earning enough to quality for National Insurance contributions, putting their future state pension at risk.

There are 6.8m part time workers in the UK [source ONS] and think tank The Resolution Foundation estimate that 3.4m employees are currently earning below the NI threshold (they believe this figure will rise to 3.5m by April 2015).

ASOS

Another high profile company which was mentioned was the fashion online company ASOS and in particular its warehouse in Grimethorpe, South Yorkshire which was hailed as ‘a success story’ by David Cameron and was taken as a sign that the country was moving out of recession as 3,000 jobs were created in an area with the second highest youth unemployment rate in the country. Dispatches reveals that a substantial number of workers have been hired directly from Eastern Europe rather than the local area.

 ASOS outsource the running of the warehouse to logistics company Norbert Dessantrangle. NDL use an employment agency called Qualitycourse Ltd, trading as Transline Resource Group to supply workers. In 2014 Transline were crowned Temporary Recruitment Agency of the year

 Some Transline workers who spoke to Dispatches believed they would be offered permanent jobs on completion of a temporary 12 week contract, but were laid off before completion of this period. After 12 weeks employment agency workers enjoy the same pay and conditions as permanent employees.

 Transline Resource Group also use a complex salary sacrifice scheme which involves the worker being paid partly in expenses, enabling Transline to avoid some National Insurance and PAYE contributions.

 Across the UK, companies that pay people in this way are depriving the Government of significant revenue.

Transline were questioned over there payment methods to its workers as Dispatches interviewed several workers who told them they were recruited as apprentices and would therefore bed paid the apprentice rate of national minimum wage which currently stands at £2.73 per hour. The workers they spoke to on these low rates said they had no idea they were apprentices, and that they received no specialist training apart from their normal job induction.

Referring to ASOS, Transline told Dispatches: “In the past 14 months, nearly 1,300 people we have supplied have secured permanent jobs at this site. They were not aware of any dissatisfaction among the workforce.” It added that temporary workers earn the same as their “permanent comparators” and there are no “onerous Agency Worker Regulations which Transline would want or need to avoid on the expiry of 12 weeks service.”

ASOS told Dispatches that running of its Barnsley site is “100% outsourced” to logistics company Norbert Dentressangle, but added: “We take all matters relating to people associated with or employed by our company extremely seriously, this includes our supply chain.” Norbert Dentressangle said it was “satisfied that the provision of labour at the Barnsley distribution centre is both legal and fully compliant”.

Following an in depth investigation by the Dispatches researches it found out that Transline used to supply workers to a factory in Bolton, which makes own brand pizzas for Britain’s biggest retailers. But the food industry is different as workers are protected by a Government body called the Gangmasters’ Licensing Authority, or GLA which regulates their employment.

When the GLA inspectors called in 2013, they didn’t like what they found. Transline was running a salary sacrifice scheme, paying workers partly in expenses and partly in wages. The GLA found Transline was likely not to be paying “adequate tax and National Insurance contributions”.

The GLA reviewed a sample of payslips and found that some workers were receiving much less than the National Minimum Wage “some… significantly so.” In fact, one worker was paid just £2.87 an hour before expenses. Transline advised the GLA that they were employing apprentices. This is significant because apprentices in their first year of work get a much lower rate of national minimum wage – in 2012 it was just £2.68 an hour.

However, the GLA found the “workers interviewed did not consider they were employed as apprentices”. The GLA ruled that Transline had failed its licensing standard by not paying the national minimum wage, and also found Transline’s Managing Directors not “fit and proper” persons to hold a GLA licence, meaning Transline can no longer supply workers into food production. But they were free to work in other sectors, like ASOS, paying workers in similar ways.

Transline denied these claim of paying people below national minimum wage. They said they have invested in software which prevents a worker from being paid less than the “applicable national minimum wage” and ensures employee aren’t worse off through the salary sacrifice scheme. “Such safeguards and systems are specifically designed to ensure that Transline do not break the law.”

Channel 4 Dispatches also went undercover to a meeting with an umbrella group, MAC Professional Solutions. Posing as the owner of a recruitment agency, our reporter was told how he could lawfully save money in PAYE and NI by employing workers through an umbrella firm.

General Manager Patrick Shaw explained the avoidance scheme saying, “There's tax evasion - illegal; tax avoidance which is perfectly legal. It’s, you know, helping the contractors avoid paying tax legally and we do that by use of contractor’s expenses. You're saving money and you're saving a good chunk of money - if I'm lucky enough to have a lot of contracts with your agency I'm making a lot of money. “

Shaw also explained how workers on one of his avoidance schemes could be employed below the national minimum wage and would not be entitled to key rights; “They’re not classified as an employee or worker, so technically the National Minimum Wage is £6.50 doesn’t exist… To be perfectly frank, they've got no holiday pay rights, they've got no employee rights…they've got no worker rights.”

Mac Professional Solutions said: “In December 2014 we underwent a review by HM Revenue and Customs and were found to be fully compliant with no issues about our operations raised… The vast majority of those that we engage with are better off as a result and none of them are compelled to do so in the first place…”

At Prestige Recruitment Specialists we do not operate any Sacrifice Salary Schemes and are fully compliant with all legislative matters in relation to HMRC matters such as National Minimum Wage, PAYE & NIC along with our obligations of the Agency Workers Regulations.

Posted: Tue 03 Feb 2015
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