Labour Market Enforcement Strategy 2019/20

24 July 2019

 

The Labour Market Enforcement Strategy 2019 to 2020 has been published which makes a number of recommendations across the three main enforcement bodies.

 

The role of Director of UK Labour Market Enforcement (DLME) came into play in January 2017, following the introduction of the Immigration Act 2016. The role was established to bring together a coherent assessment of the extent of labour market exploitation, identify routes to tackle exploitation and harness the strength of the three main enforcement bodies:

 

  • HM Revenue and Customs National Minimum Wage (HMRC NMW)
  • Gangmasters and Labour Abuse Authority (GLAA)
  • Employment Agency Standards (EAS) Inspectorate

Sir David Metcalfe was appointed to the role and his remit spans the whole of the compliance spectrum, from relatively minor underpayment of NMW all the way through to serious labour exploitation within modern slavery.

 

The DLME Strategy 2019/20 makes 12 recommendations spanning three cross-cutting themes:

 

  • Prioritisation of enforcement resources
  • Helping employers get it right
  • Using joint working to tackle more serious and persistent non-compliance in the labour market

 

The strategy document is a hefty document at 168 pages; highlighted below are some of the relevant recommendations around the national minimum wage.

 

Naming and shaming

Naming and shaming of non-compliant employers used to be a regular publication but came to a halt in the first half of 2018. This publication may be back on the cards as the DLME Strategy recommends that HMRC and BEIS focus on sector-specific naming rounds coupled with an education campaign to maximise the impact of naming and to raise awareness. It also recommends that at the same time, in order to expose the most serious NMW/NLW infringements, the cut-off for naming should be on the basis of average arrears per worker per employer and the threshold set at average arrears in excess of £500.

 

Sector specific advice booklets

The Strategy recommends that BEIS, with input from HMRC enforcement, produce supplementary sector specific advice booklets for those sectors where trends of certain types of breaches emerge or where the regulatory landscape is particularly complex (i.e. such as issues around uniform deductions within retail and hospitality, pay averaging, salary sacrifice, etc.).

 

Guidance and training

HMRC NMW should improve the consistency of its caseworkers’ interpretation and application of the NMW regulations by:

 

  • Providing additional training on how to interpret and apply the legislation, particularly for emerging problem areas for underpayment, such as uniform deductions
  • Reviewing and improving the internal operational guidance offered to caseworkers by the Professionalism, Learning and Guidance team (PLG) as the first point of contact to clarify the regulations and operational application. This should be carried out in tandem with the review of external guidance for employers

Recommendations for BEIS to review and consult on the following sections of the NMW regulations, to consider issues regarding their practical application and operation, include:

 

  • Record-keeping requirements: to set out the minimum requirements needed to keep sufficient records and to extend the time period for which employer records must be kept, to align with the period of liability under the National Minimum Wage Act 1998
  • Deductions for the benefit of workers: to review the regulations underpinning deductions from pay, to consider how best to enable low-paid workers to access genuine, non-cash workplace benefits within the scope of the NMW provisions
  • Pay averaging: under current regulations pay can be averaged in some circumstances but not others, but there is no clear policy rationale for this
  • Clarifying issues around uniform payments, working time and time recording, salary sacrifice and pension schemes

Education material

The strategy recommends that all three bodies look to use The Pensions Regulator’s approach to distributing educational material as an example of best practice, such as by producing similar newsletters and 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.

 

 

Progress in any of the areas mentioned above are subject to government accepting the DLME’s recommendations.

 

The DLME Strategy 2019/20 and the accompanying research reports can be found on GOV.UK.

 

 

Sir David Metcalfe retired at the end of June and his replacement will be Matthew Taylor, who begins his appointment as the interim DLME on 1 August for 12 months.