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Employees wages delayed due to late payments

UK: Nearly half of small business owners and managing directors had to stop their own pay due to the impact of unfair payment practices by buyers, according to a new survey.

The findings from engineering services trade bodies ECA and BESA also reveals that three-quarters of business owners said they had made sacrifices, including 37% reducing their own salary, and 23% cancelling company training and learning activity. In addition, 36% said they had struggled to pay business taxes due to payment issues.

Alarmingly, 7% said they were forced to pay their own staff late.

This survey, aimed mainly at business owners, CEOs and managers, received 613 responses in total, with 213 of these from business owners and sole traders. 

ECA director of legal and business Rob Driscoll said the survey lifted the lid on the industry’s “self-harming commercial behaviour”. 

“With a lack of fair payment directly causing widespread mental health issues, abusive payment practices fundamentally remove the capacity for individuals to feel purpose or value in a sector which enables £540bn GDP within the wider UK economy,” he said. 

The impact of unfair payment practices also had further knock-on effects to businesses. 28% said it caused staff morale to drop, while 15 per cent said it led to a fall in productivity. One in five said they were unable to replace broken equipment as a result.

Payment issues had affected 92% of respondents, with two-thirds reporting that they were paid late frequently or very frequently.

Debbie Petford BESA’s director of legal and commercial services described the figures as a “timely reminder” that unfair payment practices place significant and unnecessary burdens on owners of construction SMEs and their employees.

“Urgent reform is required to prevent companies inappropriately using retentions money owed to smaller businesses down the supply chain to prop up their cash flow. The status quo is both economically unsustainable and detrimental to the wellbeing of hardworking people in our industry,” she added.

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