Employers Must Contend With New Exploitation Law Proposals

Employers who do not afford staff their legal rights could be more likely to face prosecution if the government accepts Sir David Metcalf’s 37 new recommendations on preventing workplace exploitation.

Sir David was named the UK’s first director of Labour Market Enforcement (LME), after the group was launched as part of a bid to tackle workplace exploitation last year.

In his own words, the new 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.”

Suggested measures include more stringent enforcement of holiday pay entitlements and enstating a new law obliging all employers to provide staff with a statement of their worker rights.

Taking an employer-centric approach, the strategy recommends that prosecutions against offending firms should be pursued more frequently, to set an example, whilst any violations should attract larger financial penalties than currently imposed.

To this end, Sir David 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 proposal would also place more pressure on suppliers, by making major businesses jointly responsible for exploitative practices in their supply chains.

Funding urged to clamp down on illegal behaviour

If the LME’s recommendations are followed, employers could be regulated not just more harshly but also more strictly, with additional resources allocated to the Employment Agency Standards Inspectorate to ensure that existing employment laws are being enforced.

Workers’ unions have welcomed this suggestion whilst underlining that other key issues – such as zero-hour working contracts – must also be addressed.

Unite secretary Steve Turner urged:

“The government needs to put its money where its mouth is with enough resources to make its threats a reality for bad bosses.”

He added: “Ministers could also show they are serious about standing up for workers by calling time on the insecurity currently endured by around one million working people and ban the use of exploitative zero-hours contracts.”

The practice of “phoenixing” – where directors dissolve a failing company to avoid paying employment tribunal awards to aggrieved staff – would be targeted with stricter regulations to hold directors accountable.

Licence schemes proposed for “at-risk” sectors

Amongst its significant recommendations, the new strategy proposes pilot schemes for more extensive licencing procedures for sectors with frequent, casual employees deemed at-risk of exploitation – such as car washes and nail bars.

This would ensure that workers in more precarious, less easily documented occupations are afforded all their legal rights and protections.

In April 2018, Parliament’s Environment Audit Committee announced that it would examine the working conditions and experiences of car wash workers in particular.

Committee chair Mary Creagh expressed concerns that Eastern European workers were being exploited for “cheap and convenient” service, potentially in “bonded labour” arrangements – whereby foreigners are misled into coming to the UK for a false, attractive job offers and are then forced into low-paid roles with little control over working hours to pay off debts.

Earlier this year, the Car Wash Advisory Service (CWAS) launched a ‘Wash Mark’ licensing scheme to inform consumers on which car wash sites have been audited and are found compliant with employment laws.

CWAS director Dawn Fraser says that more extensive licensing will benefit employers who are comply with regulations, supporting “the 70% of firms which want to be legitimate but do not know what to do and to close down those only there for money laundering and modern-day slavery.”

The government is expected to return its formal response to the LME report later this year, with business secretary Andrew Griffiths asserting:

“We will not accept illegal behaviour from bosses who exploit their workers and cheat the competition.”

Employment law advice for employers

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