Government respond to Labour Market Enforcement Strategy 2019/20

• Government published its response to the Labour Market Enforcement (LME) Strategy 2019/20 which confirms (as per the Queens’ Speech) that an Employment Bill to deliver the greatest reform of workers’ rights in over 20 years will be brought forward.
• The Bill will allow for the creation of a single enforcement body bringing together the Employment Agency Standards Inspectorate (EAS), Her Majesty’s Revenue and Customs National Minimum Wage and Living Wage (HMRC NMW/NLW) team and the Gangmasters and Labour Abused Authority (GLAA) referred to as “the bodies”.
• Government’s response is to Sir David Metcalf’s third and final Strategy as Director of LME, which is responsible for producing an annual strategy setting the direction of the three existing labour market enforcement bodies.
• Matthew Taylor, responsible for developing the Good Work Plan, which saw, among many other things, the introduction of the Key Information Document (Regulation 13A into the Conduct Regulations) and the abolishment of Swedish Derogation Contracts also known as ‘pay-between-assignment’ or Regulation 10 contracts, is now the interim Director of LME and sought views on his first Strategy (2020/21).  
• Government’s response makes specific reference to the appalling allegations of exploitation in clothes factories in Leicester and accepts the recommendation that a full evaluation of the Leicester pilot is undertaken to understand what works and whether it is a good model for tackling exploitation elsewhere.
• The 2019/20 Strategy made 44 recommendations of which the Government has accepted 35, partially accepted eight and rejected one.
• Accepted recommendations include;
  • GLAA to undertake more unannounced visits to labour providers across the regulated sectors as a whole to identify unlicensed operators
  • EAS staffing was increased to at least double during 2019/20 which was done through increased funding (2019/20 funding was increased to £1.125m from £0.725m the previous year)
  • The Advisory, Conciliation and Arbitration Service (ACAS) to review the statutory Code of Practice on grievance procedures, in consultation with key stakeholders, to create practical guidance for both collective and individual grievance processes
  • The bodies to establish how best to utilise Labour Market Undertaking/Order powers jointly, in order to address non-compliance across the whole spectrum of offences
  • HMRC to consider how to better identify relevant intelligence at the start of the intelligence triage process in order to optimise opportunities for targeted enforcement
  • Bodies should look to use the Pensions Regulator’s approach to distributing educational material as an example of best practice, such as by producing similar newsletter bulletins for employers on a regular basis. In particular, more use should be made of case study examples to highlight both good and bad employer behaviour as a practical guide to compliance
  • Confirms that the EAS’ remit will be extended to enforce umbrella companies. We saw this recommendation in the Good Work Plan: establishing a new Single Enforcement Body for employment rights which Government will confirms they will respond to fully
• Government rejected the recommendation that the NMW/NLW penalty multiple should be assessed and that the Business Energy and Industrial Strategy (BEIS) should commission an independent evaluation to report by the end of 2019.

Aspire Comment

There is a lot to consider in the response to the recommendations made by Sir David Metcalf. We expect that many of these accepted recommendations will be formalised in legislation over coming months as well as the production of updated or enhanced guidance documents and educational processes from Government bodies. Presumably the EAS will need to publish new/updated legislation and guidance which specifically sets regulations applicable to an umbrella company.

The extension of the EAS’ remit and the introduction of the Single Enforcement Body will be one to watch out for and will provide a one-stop shop to enforce the protection of workers’ rights. 

Whilst Government considers that this will be an enhancement on the current situation where different rights are regulated by a number of different bodies, one note of warning is that, historically, the larger the entity or department, the more that it struggles to work efficiently and, with so many factors supposedly coming under one roof, this will be an interesting development to see unfold.