UK To Tackle Exploitation Of Low Paid Workers With Penalties On Business

The UK government's Director of Labour Market Enforcement has today set out a spate of recommendations to help stop the exploitation of the country's lowest paid workers. Sir David Metcalf has made it clear that big companies will share responsibility for wrongdoing in the supply chain as part of his offering of an independent strategy to tackle an issue that is  pernicious with the potential to be socially divisive.

Sir David was appointed last year as the first individual in this newly created role with a brief  to oversee a government crackdown on exploitation in the workplace. Setting out 37 recommendations in his independent report just out, he calls for holiday pay to be enforced, payslips for all workers, and bigger financial penalties for employers who break the law.

Business needs to listen up: the report is launched as new stats from Her Majesty's Revenue and Customs (HMRC), a non-ministerial department of the UK government, show that its enforcement teams have doubled the number of underpaid workers for whom they have recouped money to 200,000 in 2017.

Sir David emphasised that the aim of the enforcement activity is both to protect vulnerable workers and to "ensure that good, compliant firms are not undercut by unscrupulous competitors."

"It's important the (UK) 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" he said.

Frances O'Grady, the General Secretary of the Trades Union Congress (TUC), responded to the proposals, saying: "Nobody should have to suffer at the hands of a boss who cheats and exploits workers. David Metcalf’s proposals would be a step forward, but there is more to do to make sure working people can enforce their rights."

"Toughening up the law is not enough alone" she added. "If enforcement is done on a shoe-string, bad bosses will continue getting away with treating staff like dirt. Ministers must make sure that enforcement agencies have the full resources they need."

It has to be said that the recent record of watchdogs on worker rights in the UK is unimpressive.

“The proposal to make leading brands jointly responsible for abuses by their suppliers is welcome. To fully stamp out exploitation, ministers must make every employer at the top of a supply chain jointly and severally liable for abuses” said Ms O'Grady.

After some notable examples of corporate failure, the UK Government is currently consulting on measures to crack down on company directors who unfairly shield themselves from the effects of insolvency and profits from business failures while workers and small suppliers lose out.

This is a corporate governance rescue effort which comes following the collapse of firms such as Carillion and BHS.

The TUC made its own recommendations on labour market enforcement in a report published last month, called  Shifting the Risk. Its key takeaway is that companies should have a greater legal responsibility for the people who work for them.

David Metcalf's report for the UK  government focuses on making leading brands jointly responsible for non-compliance in their supply chains. This would be done in private, he suggests, but with public naming of the brand and supplier for failure to correct non-compliance.

The report argues for more resources to the Employment Agency Standards Inspectorate to enforce current regulations and also expand their remit to cover umbrella companies and intermediaries. It identifies a need for local or regional piloting and licensing of hand car washes and nail bars in particular, which have been identified as being among the 17 sectors in the UK at risk of labour exploitation and modern slavery.

In nail bars - as that link to the story in The Guardian states, "the victims of trafficking for labour exploitation were mostly Vietnamese, with evidence that tax fraud and money laundering was also taking place."

At the end of the day, the Metcalf report is not just about protecting workers' rights, it is about keeping Britain's businesses squeaky clean on corporate governance and best practice and the country open for business post Brexit as a haven for investor money. The UK Government will respond formally to the report in full later this year.

It's also a report that suggests there will be measures to tackle ‘phoenixing’ - the practice of directors dissolving their companies to avoid paying workers tribunal awards and other enforcement penalties. So it seems fair to think we can expect further ripple effects onto UK corporate governance as it moves forward.

Bring on individual director responsibility and accountability...as discussed earlier on Board Talk, and as espoused by the Financial Conduct Authority and the Financial Reporting Council (FRC), and welcomed by members of the public on social media.

Because putting the 'human' into good corporate governance and best practice has to be the way forward for businesses that aim to adapt to their customer's needs, and reflect their customer's wishes.

'Human' may mean fallible, but it also implies a fundamental capacity for a critical winning combination well before artificial intelligence with all its selling points kicks in...: intellectual understanding and analysis, human empathy and listening, and a capacity to build on those  with a sense of collaborative responsibility.

This has to be a better day for workers in the Britain. Stay tuned for more, as this subject has everyone fighting to publish a report and a revelation - a sure sign that this is a critical political agenda.