Crackdown on employee exploitation

May 9, 2018



By Kate Brown

Employee exploitation - Knowles Warwick

A report by Labour Market Enforcement (LME) was set up last year to oversee a crackdown on exploitation. Measures are now being published to tackle firms who exploit staff with low pay.


The LME has outlined 37 recommendations; some of which include:


  • Bigger financial penalties for employers and pursuit of more prosecutions
  • Making information on employment rights clearer and more accessible, for example through social media campaigns and a web portal linking enforcement agencies
  • Reviewing guidance on national minimum wage collaboration to make it clearer in ‘problem areas’ such as salary sacrifice and pay averaging
  • 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
  • “Much more severe” financial penalties for non-compliance, in particular for employers that flout minimum wage regulations
  • Naming and shaming of non-compliant employers should be extended to highlight average arrears per worker
  • Employers should take greater responsibility for good practice in their supply chain, risking public naming of big brands whose suppliers are non-compliant
  • HMRC or another body should be given power to enforce holiday pay for all workers, including mechanisms to recover arrears
  • That the Swedish derogation loophole (which allows employers to pay agency workers less than permanent counterparts) is either properly enforced or abolished
  • 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


Head of LME, Sir David Metcalfe, said: “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”, and “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”.



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