One in four Hackney businesses are paying workers less than the minimum wage.
Takeaway shops were the most culpable, as four companies’ illegal activities resulted in five employees receiving a combined total of £2,800 less than they should have.
Eight workers at six phone shops in the area have also been underpaid, with their bosses guilty of withholding £1,000 in wages.
Hackney Council and HMRC were legally unable to reveal the names of the businesses involved.
Michelle Wyer, assistant director of HMRC’s minimum wage team, said: “Paying the national minimum wage is not optional – it’s the law. It is unacceptable for employers to cheat staff.
“Where we find an employer ignoring the rules, we will ensure arrears are paid in full and the employer is fined. In the most serious cases, criminal prosecution can follow.”
Rosanne Berry, chairperson of the Stoke Newington Business Association (SNBA), welcomed the operation for how it will benefit local companies.
“If you don’t pay them the minimum wage, you don’t get staff who are interested or motivated to help the business to the best of their abilities. Especially at small businesses which only employ a couple of people, they’re entitled to more than the minimum wage.
“Businesses should ideally pay their staff the living wage [£8.80 an hour], because if you show them proper respect then you get more out of them, and ultimately achieve more with your business.”
Ms Berry, who owns Rosa Lingerie – the longest-established store in Stoke Newington – also said that getting a legal salary is vital for local workers who want to stay in the area.
“I don’t think people can afford to live in Hackney without earning the minimum wage – paying rent would be impossible. You need to work more hours than is legal or take on two or three jobs if you’re not getting the minimum wage.”
John Page, secretary of social justice group Hackney Unites, said that if the investigations proved successful it “would have a huge impact” on the local economy.
17 people were also arrested for immigration offences
“There has always been a suspicion that there are substantial numbers of people in Hackney being paid below the minimum wage, but who feel too insecure in their employment to report it. If all employers respected the legal minimum this would have a huge impact. For one thing, good and responsible owners are being undercut by employers who operate illegally.”
Mr Page, 53, also spoke of the potential advantages of workers being paid the London living wage, which Hackney Council already does for all of its directly employed staff.
“It would mean the poorest workers in Hackney had more money in their pockets, which would benefit local businesses. It would also slash spending on welfare.”
The crackdown also resulted in 17 employees being arrested for immigration offences, while all 21 of the takeaway shops visited had failed to register to pay VAT. London HMRC sat the next round of inspections will take place within the next month.
If you are being paid less than the national minimum wage of £6.31, please call the Pay and Work Rights Helpline on 0800 917 2368. The National Minimum Wage brackets in 2013 were: £6.31 for 21 and over; £5.03 for 18 to 20; £3.72 for under 18s; £2.68 for apprentices