10 takeaways from the Labour Market Enforcement Strategy 2019/2020

Yesterday we published new analysis showing that 1 in 14 UK workers are not getting their legal holiday entitlement.

This means they’re missing out on £3.1bn of paid leave each year – a staggering amount of wage theft and a clear sign that the statutory enforcement of employment rights is falling short.

So the publication of a new strategy for tackling labour market exploitation by the Director of Labour Market Enforcement is timely.

If the government is serious about tackling labour market exploitation it should implement these reforms.

Instead, it’s consulting on whether to merge the existing enforcement agencies into one body.

The Director of Labour Market Enforcement has echoed our warnings that this could be a distraction from the important day to day work.

We’ve picked out 10 key recommendations which highlight where reform is needed most.

10 key recommendations

1. The Director says that all three bodies still have some way to go to fully align their activities with their underlying remit. It’s concerning that he says the enforcement agencies have “no sense of how their efforts are contributing more broadly to tackling the fundamental issue at hand: reducing employer non-compliance and thereby improving the lot of workers overall” .

The Director also calls for agencies to carry out a proper independent evaluation of their own activities to determine what enforcement activity makes the most positive impact. This should happen as soon as possible.

2. On HMRC enforcement of the National Minimum Wage (NMW), there is “too much resource…focused on the lower hanging fruit”. The Director suggests that HMRC NMW enforcement should focus on more serious cases.

We agree. That’s why the TUC has made 12 recommendations for improved NMW enforcement, which include more funding for enforcement, the resumption of naming and shaming underpaying employers and targeting apprenticeships as an area where underpayment is rife.

3. The Director agreed with stakeholder concerns that the GLAA is too focussed on its modern slavery remit.

The TUC is concerned that this focus on modern slavery offences could come at the expense of overlooking wider labour market exploitation offences. The government should be clear about the targets that they have set for the GLAA in relation to modern slavery and how much of their budget is allocated for this activity.

4. The additional resources recently allocated to the Employment Agencies Standard Inspectorate are insufficient, and much more resources are needed for EAS to do its “day job”. The Director suggests that EAS resourcing needs to be doubled from its 2018/19 levels.

The TUC has flagged that there are currently 15 EAS inspectors to police nearly 30,000 employment agencies and umbrella companies. This is nowhere near enough. Doubling the budget would be a positive start, but funding should be kept under review.

5. The GLAA licensing fee should be increased so that they can become self-sufficient and not reliant on taxpayer funding.

The TUC supports this recommendation. If the licensing model was fully funded by licence holders it might become more likely that licensing is extended to other sectors. An argument against licensing extension has been the cost to the taxpayer.

6. ACAS should review the statutory Code of Practice on grievance procedures to create practical guidance for collective as well as individual grievance procedures.

The TUC will explore this further. Collective grievances could be a potentially powerful tool for helping redress the power imbalance in workplaces. But it may be more appropriate to develop a new, standalone Code relating to collective grievances.

7. Enforcement bodies should update their guidance in collaboration with unions.

The TUC would welcome the opportunity to make sure that guidance is accessible to workers and highlights the key role that unions play in making sure people get their minimum rights and beyond.

8. There should be a review of existing intelligence processes and legal gateways in order to adopt a more proactive approach to intelligence-sharing and to improve the efficiency of the joint operational activity between enforcement agencies.

This is topical, as the government is consulting on a proposal to introduce a single enforcement agency, despite there being existing legal gateways that enable agencies to share information.

9. The government is currently consulting on whether to merge the existing enforcement agencies into a single enforcement authority. The Director warns:

The TUC is concerned that this government proposal is a distraction from the day to day work of the enforcement agencies.

10. The Director suggests that the enforcement system should facilitate complaints and information provided through third party or anonymous sources.

The TUC has consistently argued that unions and their representatives should be able to bring complaints on behalf of workers. At the moment, union reps can be frozen out of the process, making it difficult to support workers through a complaint.

The Director’s strategy makes it clear that reforms are needed.

Rather than divert attention and resources into a proposal for a single enforcement agency, the government must act swiftly to act on these recommendations.

Action is needed, not another consultation.