Agency abuses laid bare

A government report on labour market enforcement strategies reads as a useful ‘A-Z’ of abuses that contractors and other temporary work-seekers face.

Agencies charging fees for finding work and withholding pay; end-users deducting from pay and withholding IDs or passports and, by either party, holiday pay being kept back.

But the report by David Metcalf, the labour market enforcement director, also reads as an invitation for contractors to have their say on whether his bodies should get more powers.

Umbrellas and ‘other intermediaries’

For the EAS for example, Metcalf wants to know if it should be able to require agencies to set out all deductions and outline in workers’ contracts the full amount they will get paid.

The latter recommendation suggests that it is not just the new users of umbrella companies who are at risk at being disappointed at their take-home pay, which is minus of taxes and possible deductions.

Widening the EAS’s remit so it can oversee umbrella companies is another question he poses however, as well as whether the EAS should cover “other intermediaries in the supply chain.”

Floated too is the idea of bringing the AWR within the grasp of the EAS -- the Employment Agencies Standards Inspectorate, which covers the Professional and IT/Online hiring sectors.

Fewer complaints, more investigations

Alongside HM Revenue & Customs (the second enforcement body next to the third -- the GLAA), the inspectorate says it is taking a more targeted approach to enforcement.

“This stems from an increase in the number of trained compliance officers,” the report says. “Plus, HMRC has also seen a decline in the volume of complaints.”

But the Revenue’s number of investigations, mainly into NMW issues but potentially including status issues and the ‘hidden economy’, appears in the report at a record high.

In fact, it says HMRC has carried out 2,667 investigations in 2015/16 (the last year for which figures are available). Not since 2011 has the number of probes come close (2,534).

How the EAS operates

Unlike the Revenue however, the EAS is not secretive about its operation. It reveals that, where a complaint is made about a breach of the ‘Conduct Regs,’ it first contacts the agency.

If its nudges to the agency about its requirements go ignored, it visits the agency “in person,” before potentially investigating for up to six weeks (its aim, achieved in 75% of cases).  

In the six years to January 2017, EAS investigations led to nine prosecutions, and bans for three recruiters, preventing them from running or owning a staff business for up to 10 years.

Twenty prosecutions are in the pipeline, on top of the £83,000 that EAS recovered in 2015/16, mainly money owed to temporary workers, and the £57,000 it recovered in 2016-17.

‘Long-supply chains’

But Metcalf’s report indicates that the bodies’ best work is where all three of them can come together. And one issue -- rogue conduct in long-supply chains, provides that opportunity.

“While the firm at the head of the chain is normally compliant, this is not always the case further down the chain,” says the report, UK Labour Market Enforcement Strategy.

“Certification of suppliers could be used to set standards in each sector, enabling lead firms to only sub-contract to organisations that have demonstrated they comply with the rules. If this did not have the desired effect, then a stronger regime of licensing could be implemented”

If licensing fails, contractors’ agents will likely shudder at the final option -- “joint liability could be introduced to ensure that lead firms bear some responsibility for their supply chain”.

Email your view

This issue, as well as how EAS can address online platforms and apps which provide job-finding serves, is open for responses until October 13, 2017.

The email address for responses can also be used to answer the report’s other queries, including whether umbrellas companies should be put within the EAS’s regulatory reach.

Metcalf’s other big query – whether agencies should be made to spell out all deductions – is equally likely to garner responses, as deductions are one of the most frequently asked Contractors’ Questions.

Fear factors

The report says that with actual and specific offences that agencies commit, including around terms and conditions, provision of information and notification of charges, they are many reasons candidates don’t complain to the EAS.

Fear of losing their job or placement with the agency is among them, as is a general unawareness by the candidates of the rules and their rights. For others, they were too happy with their general working conditions via the agency to speak up.

Seeming to address such individuals, Metcalf reassured: “It is very important to state that most businesses wish to be compliant with labour regulations and desire that their supply chain firms are also compliant.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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