Labour enforcement body calls for crackdown on worker exploitation

The Director for Labour Market Enforcement has called for higher financial penalties for employers who exploit workers and flout employment law.

Sir David Metcalf’s recommendations are published today in an independent report that asks the Government to strictly enforce holiday pay regulations for all employees, and to make it mandatory to provide a payslip for all workers.

The report makes 37 recommendations in total, including:

• Reviewing guidance on national minimum wage collaboration to make it clearer in ‘problem areas’ such as salary sacrifice and pay averaging
• The right to a payslip should be extended to all workers, showing them total hours worked and hourly rate of pay (if they are paid by the hour)
• Making information on employment rights clearer and more accessible, for example through social media campaigns and a web portal linking enforcement agencies
• ‘Much more severe’ financial penalties for non-compliance, in particular for employers that flout minimum wage regulations
• Naming and shaming of non-compliant employers should be extended to highlight average arrears per worker
• Employers should take greater responsibility for good practice in their supply chain, risking public naming of big brands whose suppliers are non-compliant
• HMRC or another body should be given power to enforce holiday pay for all workers, including mechanisms to recover arrears
• That the Swedish derogation loophole (which allows employers to pay agency workers less than permanent counterparts) is either properly enforced or abolished
• Tackling the practice of ‘phoenixing’, where directors dissolve companies to avoid paying workers tribunal awards and to avoid other enforcement penalties.

Sir David was appointed in January 2017 to implement a Government crackdown on exploitation in the workplace, overseeing HMRC’s national minimum wage enforcement, the Gangmasters and Labour Abuse Authority (GLAA), and the Employment Agency Standards Inspectorate (EAS).

He said: “This strategy sets out how we can toughen up enforcement activity to protect vulnerable workers and ensure that good, compliant firms are not undercut by unscrupulous competitors.

“It’s important the Government has the necessary powers to crack down on bad bosses who exploit and steal from their workers – that includes bigger penalties to put employers off breaking the law.

Business minister Andrew Griffiths said: “We will not accept illegal behaviour from bosses who exploit their workers and cheat the competition which is why we are already cracking down on irresponsible company directors and boosting protections for workers.

“We will enforce holiday pay and give new rights for every worker to get a payslip and a list of their rights when they start a job as part of our modern industrial strategy plans to build a Britain fit for the future.”

Many of the recommendations included in the report overlap with proposals made in response to Matthew Taylor’s Review of Modern Working Practices, which included day-one rights for workers and more transparency over employment status.

The Government has pledged to respond formally to Sir David’s report later this year.