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Help! No contract, no taxes payed, big mess!

Hi all, I really need advise on this...
I met my partner when he just started working for a company in August and I learnt recently he never signed a contract or received any paper stating he was working for them or how much he would be payed and so on;
They agreed verbally for a rate and he started working, payments so far have been late (of course) and mixed via bank transfer and cash in hand (!!!). It is pretty clear that he is not receiving payslips, and no taxes have been payed on him ( and his 8 colleagues).
Since I learnt the situation I've asked him to push his bosses for a contract as I can't believe in 2016 someone can still work at these terms, so two days ago they gave him a contract to read and sign, we read it together and it's pretty standard but the rate he will be employed with is definitely lower then what agreed and it is backdated at the 1st of November implicating that (since he hasn't been payed yet for the last month and two weeks of work) he will (eventually) receive a salary on the new lower rate. We are trying to figure out how to move from here while looking for a regular job and if what happened is in anyway a felony since I would like to stop these people to take advantage of whoever is not confident with both language and laws.
As far as my logic goes this is a fraud, isn't it?
Shall we sue them?

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