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Published on 26 September 2018

Call for Evidence: UK Labour Market Enforcement Strategy 2019/20

This call for evidence sets out the issues on which the Director of Labour Market Enforcement would like to receive evidence to inform his Strategy for 2019/20. In the first part of our response, we tell the Director that the sectors identified will be amongst the most prevalent for using agency workers and other types of flexible workers and we cross refer the Director to our recent response to the Government’s ‘Good work’ consultation on agency workers/umbrella companies in which we set out some of our main concerns and put forward some ideas for change. In the second part of our response we draw on some of what we know about HMRC the organisation (through being a ‘critical friend’ for the last 20 years) in order to answer questions on allocating resources effectively and collaborative working.

To help inform his 2019/20 Strategy the Director is seeking evidence and views on the following sectors:  a. Hotels; b. Restaurants and food services; and  c. Warehousing. The Director is also seeking views on several cross-cutting issues spanning the labour market as a whole:

a. Use of the Enforcement Bodies’ additional resources and impact;  

b. Use of compliance approaches to enforcement; and  

c. Joint working between the state enforcement bodies

In particular, we tell the Director that more should be done to support employers who want to be compliant – particularly with regards to information and guidance provision, as this would free up resources to deal with engagers at the other (deliberately non-compliant) end of the spectrum.

We highlight that the National Minimum Wage (NMW) regulations are not always easy to understand and apply by employers, especially small and micro employers. Problems are then compounded by poor advice and assistance from ‘advisory’ bodies like ACAS/HMRC and the fact that official guidance does not really cover areas that are grey or nuanced. We share a case study of an employer who (prior to our intervention) looked set to find himself stuck in a loop between HMRC and ACAS on a (straightforward) minimum wage query, and also look at the unhelpful GOV.UK guidance on ‘salaried workers’ to illustrate the points we make.

We also take the opportunity to highlight the fact that tax law and minimum wage rules interact/diverge somewhat on key issues, which may be causing employer confusion. For example, under minimum wage rules, if a worker has to pay for any type of uniform – even if it is just a pair of black trousers, black shoes and a white shirt – the cost incurred must be deducted from their pay to establish whether at least the minimum wage is being paid. However, under tax law, the rules are harsher – disallowing a deduction for tax purposes on such standard attire.

When it comes to enforcement ‘best practice’ we suggest that the three enforcements bodies should see if they can learn anything from The Pensions Regulator (TPR) who are widely regarded as successful and effective at enforcing the auto enrolment programme.

The LITRG's response can be found here: Call for Evidence: UK Labour Market Enforcement Strategy 2019/20 – LITRG response

Meredith McCammond

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