Auditors find 18 Boohoo suppliers paying under the minimum wage

Leicester Boohoo

Boohoo has been selling clothes in recent years from 18 suppliers paying under the minimum wage, according to findings from third-party auditors.

Third-party auditors raised red flags on the 18 factories over the past four years, an investigation from The Guardian newspaper has found.

Auditors believe that workers could have been paid as little as £3-£4 an hour due to working practices at the factories that failed to accurately record the number of hours worked.

The latest revelations come as an independent investigation, ordered by Boohoo itself, is underway of its entire supply chain. Alison Levitt QC is leading the inquiry, which was commissioned after a report in The Sunday Times in July, which alleged workers at a factory, where Boohoo garments were seen, were paid as little as £3.50 an hour.

That report led to £1.5bn being wiped off the Manchester-based fashion group’s share price over two days, but it insisted the supplier in question was not on its official supplier list and had been subcontracted to repackage garments, without its knowledge.

It subsequently cut ties with the supplier who had sub-contracted the work saying it had breached the terms of its contract.

The Guardian says that Boohoo has not seen the independent auditors’ reports as they were created for third parties, but Boohoo said its own auditors had raised concerns.

“The documentation that has been seen by The Guardian appears to be a selection of commentary from a limited number of the third party audits that have been completed. Whilst we are deeply concerned by these findings, until these processes are concluded, we have had sight of all the facts and received Ms Levitt’s findings, it would be inappropriate for us to comment further,” the company said.

The Guardian report named a number of suppliers and Boohoo said “our own investigations have highlighted similar issues” but it preferred to allow the factories concerned to show “demonstrable, measurable and significant improvement to protect the jobs of those employed”. If this was not the case it said it would not hesitate to terminate contracts.

Earlier this week Home Secretary Priti Patel wrote to Boohoo CEO John Lyttle to urge the company to do more to support workers in its supply chain and not simply walk away if and when it encountered issues.

“I am concerned that your response to recent reports of labour exploitation in your supply chains appears to be focused on terminating contracts with suppliers found to have breached your code of conduct, rather than on protecting vulnerable workers,” Patel said in her letter.

John Lyttle had previously written to Patel to encourage her to consider issuing “Fit to Trade” licenses for UK garment factories, a move that it also endorsed by the British Retail Consortium.

Boohoo manufactures around 40% of its clothing in the UK and said it is committed to making clothes here. Next month it is due to open its own hi-tech “model factory” in Leicester as part of a joint venture.

Shares dropped just over 9% this afternoon following publication of The Guardian investigation, hitting 280.50p per share. Before the accusations were made by The Sunday Times in July, Boohoo’s shares had reached as high as 412p.