Ikea: Minimum wage scandal

31st March 2017

Ikea is usually the subject of discussion due to its (apparently) uncomplicated flat pack furniture and Swedish meatballs. But last week it hit the headlines for all the wrong reasons when it was accused of not paying workers the minimum wage. So what does this story involve and what lessons can be learnt?

Lorry drivers paid well below the minimum wage

A recent BBC investigation has revealed that many of Ikea’s lorry drivers are paid so little that they have been forced to live out of their trucks for months at a time while they are on the road across Europe. One driver was quoted as saying he felt ‘like a prisoner’ in his lorry, with others suggesting that they can spend up to four months away from home sleeping, eating and washing in their trucks because they can’t afford accommodation in the countries they are working in.

The BBC investigation suggests that because the drivers are largely employed by haulage companies based in Eastern Europe and brought over to work from poorer countries they are being paid based on their country of origin, not on where they are working. One example cited a Romanian working in Denmark who was being paid an average monthly wage of 477 Euros in comparison to a Danish national doing the equivalent for 2200 Euros. Despite EU regulation which dictates that the driver should be guaranteed the host’s minimum wage, companies are clearly taking advantage of loopholes in the law enabling them to pay less.

Lessons to be learnt

While Ikea can’t be accused of doing anything illegal – after all it is their suppliers that are being accused of under paying workers – it certainly doesn’t do the brand any good.  And it could get worse. If their suppliers do face prosecution, Ikea could find itself on the receiving end of fines or criminal action. What this story certainly demonstrates is the importance of ensuring companies know what all parties in their supply chain are doing – failure to do so could be disastrous. And if we relate this to the contracting arena, the lesson for recruitment businesses is clear. You must be aware of tax laws across the jurisdictions in which you operate. If you are unsure of the complex tax landscape it is always best to partner with a specialist to keep you on the right side of the law. Contact the team to find out how we can help.

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