Fashion

Fast-fashion factories in Leicester use secret clocking-in machines to cover up illegally low wages


Secret clocking-in machines have been discovered at clothes factories in Leicester, letting suppliers of fast-fashion retailers pretend staff are working fewer hours and enabling them to pay staff less than the minimum wage.

The finding is among many worrying conclusions in a new report that warns rogue elements of the city’s textile industry are continuing to exploit workers, two years after mistreatment by Boohoo contractors during the first Covid-19 lockdown became a national scandal.

Echoing i‘s investigation into Leicester’s garment manufacturing sector last year, the Low Pay Commission warned of “widespread and flagrant” breaches of employment law by factories, facilitating benefit fraud and tax evasion.

It suggests some suppliers have continued to attempt to evade audits by retailers and official inspections. The authorities have been unable to make significant breakthroughs on illegal working and believe the problems are no worse in Leicester than other industries elsewhere in the country, but the report questioned how this can be the case when breaches continue to be uncovered in the media.

The Low Pay Commission, an independent body that advises the Government about the National Living Wage and the National Minimum Wage, is calling for a thorough public review of Operation Tacit, which has been trying to identify and stop abuses of garment workers in the city.

It says a decision needs to be made on whether further regulation should be imposed on the clothing industry – and is still waiting for recommendations on workers’ rights that it made in 2018 to be introduced.

“Most of the people we spoke to believed underpayment and other non-compliant practices were still ongoing,” said the report, published on Monday. “The most common practice reported is underpayment of the minimum wage via misstatement of hours of work.

“Workers told us about situations where they are paid for a stated number of hours at the minimum wage, but in reality work longer than is officially recorded. This has the effect of reducing workers’ average hourly pay below the minimum wage.

“Hours above the stated number may be paid cash-in-hand, if at all. Some workers are made complicit because they claim benefits on the basis of their recorded hours, rather than their actual hours.

“In an effort to control this practice, retailers and supply chain auditors increasingly insist on biometric machines for workers to clock in and clock out. We heard, however, that these too can be circumvented, for example via a second, hidden machine or a separate paper record. One auditor told us they had done two visits in recent months where they had identified additional clock card machines in another part of the building from the brand-new biometric system.”

The report noted “a stark gender divide in outlook, with women feeling conditions had deteriorated and men more optimistic”. One NGO told the commission that “while some of the worst factories had been forced to close down, this had led to even more exploitative conditions such as women using sewing machines at home or night working”.

Asked if there was one thing they could change about their factory and their job, many workers called for stronger contracts with fixed hours, but cries for help also emerged. One pleaded for “a safe environment with no mental torture”.

Leicester’s fast-fashion manufacturing hub is mostly located in its North Evington and Spinney Hills neighbourhood (Photo: Christopher Furlong/Getty Images)

A lingering scandal in Leicester

During an investigation last summer, i heard multiple accounts that workers were being paid significantly less than the minimum wage, of some employers paying the legal amount but then forcing people to hand back cash, and of threats and intimidation to stop workers speaking out.

But it also revealed that Operation Tacit had not led to any prosecutions for modern slavery, minimum wage or health and safety offences. Two company directors caught on camera paying workers £3.25 or less in 2017 were also found to still running firms in Leicester, having not been disqualified by HMRC.

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Simon Sapper, one of the commissioners who worked on the new study, said he was frustrated at the “disconnection” which continues today.

Her Majesty’s Revenue and Customs, the Gangmasters and Labour Abuse Authority and Leicestershire Police, among other organisations involved in Tacit, “are putting serious and concerted resources into trying to get to grips with this,” said Sapper. “What they say to us: with our best endeavors, we cannot find a problem in the garment industry in Leicester that’s worse than any other sector in London or Manchester.

“Then you talk to workers themselves, who would only speak to us on condition of anonymity – as was the case in your report – and you get an entirely different picture. All the things that you identified in your report, we were also told. ”

The commission blames this on workers not reporting underpayment because they are “afraid of losing their hours and incomes, worried about moving jobs and often grateful just to have employment. There is a deep distrust of enforcement bodies and a lack of faith that complaining will make any difference, other than to put their livelihoods at risk.”

Sapper said improvements have been made and acknowledged some complaints may be historic, but worries that complacency may set in. He indicated that a lack of prosecutions should lead to a stricter regime, but fears what good work has been done could go to waste.

“We can shine a light on this but there are other actors who have the responsibility and the capacity to make far more decisive interventions,” he said. “There’s not even an Employment Bill in the latest Queen’s Speech.”

He added: “It is disappointing that more progress hasn’t been made faster… We recognise that the Government has a number of competing priorities. We’ll just keep reminding the Government of what we’ve recommended to them for as long as is necessary.”

A UK Government spokesperson said: “The UK has one of the best workers’ rights records in the world and we’ve made strong progress in bringing forward legislation to ensure that our employment law keeps pace with the needs of our labour market.

In response to the report, a Government spokesperson said it is “determined to make work pay and in April we increased the National Living Wage to £9.50, the largest ever increase since its introduction in 2016. We take enforcing the minimum wage seriously and take robust enforcement action against employers who do not pay their staff correctly.” Since 2015/16, it has more than doubled the budget for compliance and enforcement of the minimum wage to £27.8m for 2022/23.

The recommendations ignored by the Government

The Low Pay Commission outlined a package of measures intended to give workers greater protection against unfair work practices in 2018. These were:

  • “A right to switch to a contract which reflects your normal hours. This is not about a worker requesting a change to the amount of work they do, but rather proper recognition of their normal hours. We believed this would help to tackle the fear of employer retaliation by providing a guarantee of the worker’s normal hours.”
  • “A right to reasonable notice of work schedule – to encourage employers to provide workers with their work schedule in advance so that individuals can plan their lives.”
  • “Compensation for shift cancellation or curtailment without reasonable notice – to discourage employers from cancelling shifts at the last minute or partway through a shift.”
  • “Information to workers – the written statement of terms from employers should detail the rights we are proposing here.”

Although these measures were accepted in principle by the Government, it has not yet initiated any legislation to implement them. It held a consultation inviting views on tackling the challenges of non-guaranteed hours for workers and is understood to now be analysing these results.

Troubling times for fast fashion

The latest revelations come at a sensitive time for fast fashion and its workers. One of the leading brands, Missguided, went into administration in May after i revealed that it had stopped paying its suppliers weeks earlier, owing some of them millions of pounds. It has since been bought by Mike Ashley’s Frasers Group.

Many reputable suppliers were left fighting to stay afloat. But even before this affair, the Boohoo scandal, logistical problems and increased costs – leading into the cost-of-living crisis – had already led to many job losses. Manufacturers believe some workers have been “displaced into other sectors such as food production”, said the commission.

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Boohoo Group – which owns brands including Pretty Little Thing and Nasty Girl – was shamed into reforming its supply chain after an independent review documented a wide array of serious failings in 2020. It reduced the number of manufacturers it used in Leicester and introduced a stricter monitoring system, saying it was delivering on its commitment “to fix the issues identified in Leicester”.

Brands rely on Leicester as a hub, using small factories of skilled workers able to take on small orders at short notice to react to demand as quickly as possible. But suppliers warn they are forced to operate with tiny profit margins because of retailers ruthlessly forcing down prices.

“The manufacturers we spoke to also operated factories overseas; these were their profit centres, while operations in Leicester ran at a loss,” said the report. “More than one person we spoke to cited the difference between the National Living Wage of £9.50 and a minimum wage in Morocco of £1.24.”

Dominique Muller, policy lead at the ethical fashion campaign group Labour Behind the Label, said: “The conclusions are sound: that recommendations made time and time again need to be acted upon, and that the conclusions of the enforcement bodies – that Leicester is not ‘abnormally’ high in terms of low pay and other labour rights abuses – are at great odds with what others on the ground are saying.”

The report praised the Fashion-workers Advice Bureau Leicester, a team of dedicated community workers offering advice and support, which launched this year. One of the bureau’s leaders, Tarek Islam, said it was delighted by this recognition, arguing “it is imperative to ensure the positive developments in Leicester are not just maintained but built upon”.

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