Companies have been warned they could face tougher action on breaches of labour laws, including failure to ensure their supply chain is meeting all regulations, as part of a new strategy being developed by Sir David Metcalf, the recently appointed director of labour market enforcement
These are HMRC’s national minimum wage (NMW) enforcement team, which also handles the National Living Wage (NLW), the Gangmasters and Labour Abuse Authority (GLAA), and the Employment Agency Standards Inspectorate (EAS).
In an introductory report released ahead of publication of the first full labour market enforcement strategy later this year, Metcalf said intended to work with these bodies to ensure enforcement undertakings and orders, which carry a maximum two-year prison sentence for serious or repeat offences, were used widely.
Metcalf’s analysis highlights that labour market non-compliance remains a feature of supply chains, and he warns that large employers will be required to do more to ensure compliance at all stages of supply.
The report states: ‘Examples of non-compliance exist throughout the supply chain in construction, cleaning and security and intelligence indicates many problems across sectors, often involving cash-in-hand payments and self-employment.
‘Recent media reports alleged serious breaches of labour regulations by clothing manufacturers supplying household-name retailers. Sometimes sub-contracting occurred without the knowledge of the retailer. At one manufacturer exploitation was quite open. Pay was below the NMW/NLW, the right to work in the UK had not been established, and various Health and Safety directives were being flouted.
‘We will consult widely on this matter as it will be an important component of the spring strategy.’
Metcalf indicated the strategy will also require the three agencies to develop closer co-operation, with the creation of an intelligence hub. Looking at HMRC specifically, he said the department faces ‘a formidable challenge’ enforcing the NLW, as the proportion of the workforce covered by the regulations is set to rise from 5% in 2015 to almost 14% in 2020.
The report states: ‘I will discuss with HMRC and other interested parties the balance between extra joint work and properly enforcing the NLW.’ Metcalf says he will also consider whether the remit of the NMW/NLW team within HMRC be extended to cover other types of non-payment of wages.
There will now be a period of consultation with business and worker representatives, industry bodies and enforcement action groups ahead of publication of the first full strategy by the end of 2017.
The deadline for comments is 13 October.
Labour Market Enforcement Strategy: introductory report is here.
The summary of issues for the consultation is here.
