OBE couple own business on minimum wage ‘named and shamed’ list

Tom Eden, PA Scotland
·6-min read

A couple made OBEs in the New Year Honours List are directors of a hairdressing business which failed to pay workers the minimum wage, an investigation by HMRC has found.

Alan and Linda Stewart were made Officers of the Order of the British Empire.

Their Rainbow Room hairdressers in Glasgow’s Royal Exchange Square failed to pay £851.70 to six workers between 2016 and 2018.

The couple founded Rainbow Room ­International, which has 12 salons around Glasgow and the west of Scotland.

The salon’s website describes the owners as a “formidable force in the hairdressing industry”, adding: “As well as building Scotland’s largest salon group, they have maintained the business’s high standards and reputation for hairdressing excellence.”

The investigation also found Clare McFarlane and Suzanne McGill, who were trading as Rainbow Room International, South Lanarkshire, failed to pay £1,304.77 to 16 workers.

Rainbow Room (East Kilbride) Limited, South Lanarkshire G74, failed to pay £2,378.77 to 15 workers

William Fleeson, trading as Rainbow Room International, Stirling, failed to pay £2,089.66 to 11 workers.

A Rainbow Room spokeswoman declined to comment when asked about the business underpaying its staff.

A spokesman for the Cabinet office said the companies named on the name and shame list are franchises and not directly managed by the Stewarts, that there was no issue raised with them directly and no action required from them personally.

They added that all the companies on the list have paid back the arrears after being investigated.

Another 12 businesses – including Pizza Hut and St Johnstone Football Club – were among those named by the UK Government.

The Rainbow Room hairdressers in Glasgow’s Royal Exchange Square
The Rainbow Room hairdressers in Glasgow’s Royal Exchange Square (Andrew Milligan/PA)

Pizza Hut in Edinburgh was the most prolific culprit, according to HMRC, having paid 10,980 workers a total of £845,936.41 below the minimum wage.

A spokeswoman for the restaurant chain said: “Several years ago, along with many other businesses in the sector, HMRC made us aware of an error relating to a historic uniform policy.

“In 2018 we completed a wage adjustment for current and former employees working closely with the HMRC to understand who was eligible.

“It is important to stress that there was never any intent to underpay our employees, we are advocates of the principles that underpin minimum wage and we are confident that the necessary processes have been fixed to ensure that this will not happen again.”

St Johnstone also owed £14,266.74 to 28 workers, 25 of whom were apprentice footballers.

A club spokesman said: “Due to the absence of written evidence to support our position in relation to hours worked as opposed to the actual rate of pay, the club was unable to disprove HMRC’s estimate of the average hours worked per week by these employees.

“The hours of work undertaken by our apprentices was fully reviewed and changes were implemented immediately following HMRC’s outcome.

“The perceived failure to pay three other employees the national minimum wage related to voluntary deductions from pay by these employees.

“The club prides itself in treating our staff fairly and we are extremely disappointed to find ourselves in a position whereby we are criticised for failing to meet national minimum wage requirements.”

All the named companies were served a notice of underpayment between September 2016 and July 2018.

They have been ordered to pay back the wage arrears to workers at the current rate, as well as facing fines of up to 200% of money owed- capped at £10,000 per worker – that is paid to the government.

The UK Government’s business minister Paul Scully said naming employers for failing to pay the minimum wage should be a “wake-up call” to rogue bosses.

The “naming and shaming” scheme has been resumed after two-year pause and found that 139 UK companies investigated between 2016 and 2018 failed to pay £6.7 million to more than 95,000 workers across the UK.

Mr Scully said: “Paying the minimum wage is not optional, it is the law. It is never acceptable for any employer to short-change their workers.

“This should serve as a wake-up call to named employers and a reminder to everyone of the importance of paying workers what they are legally entitled to.

“Make no mistake, those who fail to follow minimum wage rules will be caught out and made to pay up.”

The Government explained that one of the main causes of minimum wage breaches was low-paid employees being made to cover work costs, such as paying for uniform, training or parking fees.

Other employers also failed to raise employees’ pay after they had a birthday which should have moved them into a different National Minimum Wage bracket.

The current minimum hourly rate is £8.72 for over 25s, £8.20 for workers between 21 and 24, £6.45 for those aged between 18 and 20 and £4.55 for under 18s.

The minimum wage for apprentices is £4.15 per hour.

The full list of Scottish companies named for failing to pay the minimum wage:

  • Pizza Hut (U.K.) Limited, City of Edinburgh WD6, failed to pay £845,936.41 to 10,980 workers

  • St Johnstone Football Club Limited (The), Perth and Kinross PH1, failed to pay £14,266.74 to 28 workers

  • Dakota Forth Bridge Limited-Dissolved 20/03/2020, City of Edinburgh S70, failed to pay £10,236.50 to four workers

  • WKW Partnership Limited, trading as Cairngorm Hotel, Highland KA21, failed to pay £4,057.00 to seven workers

  • Mr Malcolm Gilmour and Mr David Gilmour, trading as Gilmour Bros, South Lanarkshire, failed to pay £2,446.58 to three workers

  • Rainbow Room (East Kilbride) Limited, South Lanarkshire G74, failed to pay £2,378.77 to 15 workers

  • Mr William Fleeson, trading as Rainbow Room International, Stirling, failed to pay £2,089.66 to 11 workers

  • D & D Decorators Limited, East Ayrshire KA3, failed to pay £2,080.35 to one worker

  • Keasim Glasgow Limited, trading as Malones Glasgow, Glasgow City G2, failed to pay £1,503.43 to one worker

  • The Roxburghe Hotel Edinburgh Limited, City of Edinburgh EH3, failed to pay £1,317.43 to 47 workers

  • Clare McFarlane and Suzanne McGill, trading as Rainbow Room International, South Lanarkshire, failed to pay £1,304.77 to 16 workers

  • Oakminster Healthcare Limited, trading as Cumbrae House Care Home, Glasgow City G41, failed to pay £1,292.30 to 21 workers

  • Mr Mohammed Nasir, trading as Omar Khayyam, City of Edinburgh, failed to pay £935.31 to two workers

  • About Face Beauty Clinic Limited, Glasgow City G74, failed to pay £924.51 to six workers

  • Rainbow Room (24 Royal Exchange Square) Limited, Glasgow City G1, failed to pay £851.70 to six workers