Employers who exploit staff could face higher financial penalties and increased risk of prosecution under recommendations by a government-backed body, Labour Market Enforcement (LME).
In his first annual full strategy report, Sir David Metcalf proposed making well known retailers, restaurant chains or other brand owners jointly responsible for any non-compliance with employment law throughout their supply chain.
“The probability of an HMRC minimum wage investigation is only once every 500 years but they are only fined an average twice their arrears. The surprising thing is how many companies comply.”
The LME report has made 37 recommendations including that big companies should put more pressure on their suppliers, including:
- Bigger financial penalties for employers and pursuit of more prosecutions
- Making it the law that employers provide a statement of rights for employees and a payslip for all workers
- Make leading brands jointly responsible for non-compliance in their supply chains
- More resources to the Employment Agency Standards Inspectorate to enforce current regulations
- Piloting licencing of hand car washes and nail bars, which have been identified as sectors at risk of exploitation
- Tackle “phoenixing” – the practice of directors dissolving their companies to avoid paying workers tribunal awards
“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.”