Money Wellness
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calendar icon13 Sep 2023

Low-paid workers trapped by underpayment

One in three underpaid workers are trapped in a cycle of underpayment year after year, according to a study by the Low Pay Commission (LPC).

Workers can’t escape this cycle because there’s too many restraints stopping them from challenging exploitative employers, meaning they’re likely to remain being paid under the national minimum or living wage year-after-year.

To compile the report, the Low Pay Commission spoke to both employers and those on low-pay and looked at the labour market and the factors that force workers to accept exploitation.

Two factors were most prominent – workers believe that it’s risky to change employment even though the job market remains stable currently. And those already in insecure employment are left more dependent on their employers, creating the perfect environment for exploitation.

Despite so many people being underpaid, very few workers bring underpayment cases to the enforcement body.

The LPC believes the government needs to do more to identify the scale of the problem and make workers more aware of their rights.

National minimum wage and national living wage rates

The hourly rate for the minimum wage depends on your age and whether you’re an apprentice.

To get the national minimum way you must be:

  • At least school leaving age (18)
  • Aged 22 and under

Workers aged 23 and over get the national living wage.

The current rates are as follows:

  • Apprentice - £5.28
  • Under 18 - £5.28
  • 18-20 - £7.49
  • 21-22 - £10.18
  • 23 and over £10.42

What should you do if you’re being paid under the national living or minimum wage?

It’s against the law for your employer to pay you less than the national minimum wage or national living wage.

Employers must keep accurate pay records and make them available when requested.

If you’re being underpaid or think you’re being underpaid, talk to your employer first. If that doesn’t resolve the issue, report it to HRMC at Pay and work rights complaint - Digital Forms Service - GOV.UK - About the complaint (

You can also call the Acas helpline – 0300 123 1100 – for free confidential advice.

If you’re found to have been underpaid by your employer, you’re legally entitled to the back pay you’re owed.

Are tips counted towards minimum wage or national living wage?

If you receive tips at work, they can’t legally count towards your national minimum or living wage. If tips are counted as part of your pay, and you rely on them to bring your pay up to the national minimum or living wage rate, then you could be underpaid and not receiving the wages you’re legally owed.

Avatar of Caroline Chell

Caroline Chell

Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.

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