Report urges crackdown on bad employers

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Firms that exploit workers must face tougher sanctions amid mounting evidence of widespread modern slavery, a report has urged

The report by the government-backed Labour Market Enforcement (LME) body made recommendations to tackle forced labour and other forms of modern slavery.

These include larger financial penalties with a risk of prosecution for employers, obliging them to provide a statement of rights for employees and a payslip for all workers, making organisations jointly responsible for non-compliance in their supply chains, more resources for the Employment Agency Standards Inspectorate to enforce current regulations, and tackling 'phoenixing' (the practice of directors dissolving their companies to avoid paying workers tribunal awards).

The report was launched as HMRC data revealed the number of unpaid workers its enforcement teams recouped money for doubled to 200,000 in 2017.

Director of Labour Market Enforcement David Metcalf, who was appointed in January 2017 to oversee the government's crackdown on workplace exploitation, said the government must be tougher on bad employers.

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

"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.”

The government has said that it will respond to the report later in the year.

Norman Pickavance, CEO of think tank Tomorrow’s Company and co-founder of The Centre for Organisation Renewal, welcomed the report. “ It is an extremely encouraging report, providing clear steps on what is needed to prevent unscrupulous British companies from undercutting others in their markets simply by exploiting their workforce," he told HR magazine.

He added that the proposals would only be effective, however, if backed by sufficient government resources to monitor compliance. "I worry that this will not happen," he commented.

Pickavance added that also crucial to the success of the recommendations would be a national whistleblowing line that workers could use to raise concerns, with calls logged and the number of calls reported publicly. He emphasised the importance of large corporates and brands being required to police their supply chains, and recommended they be obliged to share findings on ‘high-risk’ companies on a national database.

"Without these additional measures the list of recommendations will lack teeth, and won't make much impact," said Pickavance. "Perhaps the best illustration of this is the recommendation that workers should be given a copy of their rights. It is a good idea, but we must understand that if as a worker you are frightened to raise your concerns... then you will instead stay quiet and put up with things for fear of dismissal or a reduction in [your] hours".

Julia Kermode, chief executive of the Freelancer & Contractor Services Association (FCSA), also welcomed the proposals. "In particular we are pleased with the proposed measures to tackle non-compliance within the supply chain," she said.

"Placing joint responsibility on end clients and their suppliers to ensure that the whole workforce is not being exploited is a significant move to instilling good working practices; Sir David [Metcalf] promised to punish rogue employers who undercut honest businesses so I see this as a very significant and positive move to genuinely levelling the playing field for compliant businesses."

She added: "In the past government policymakers have simply paid lip service to tackling the issue and have failed to heed warnings about the unintended consequences of unscrupulous firms exploiting the loopholes in the system."

Separate research from the Gangmasters and Labour Abuse Authority (GLAA) has revealed that cases of modern slavery have increased by 35% year on year, with the UK being one of the biggest destinations for labour trafficking.

The report revealed 17 sectors where abuse – ranging from wage theft to slavery – is most acute. It raised the issues of debt bondage (where migrants become indebted to recruitment agencies for travel or illegal work-finding fees), bogus self-employment contracts to hide abusive working practices, and abuse of zero-hours contracts.

Construction, recycling, nail bars and car washes were named as the sectors where exploitation is most widespread. Agriculture, food packing, fishing, shellfish gathering, warehouse and distribution, garment manufacturing, taxi driving, retail, domestic work, and social care were also highlighted.

In response to workers in these sectors being identified as most at risk of exploitation, the LME's report recommended piloting the licensing of hand car washes and nail bars.

Commenting on the LME report, 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."

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