Companies whose suppliers fail to pay the minimum wage or curb holiday pay could be named and shamed under a new regime proposed by the government’s workers’ rights tsar.
In his first annual full strategy report, Sir David Metcalf proposed making well known retailers, restaurant chains or other brand owners jointly responsible for any non-compliance with employment law throughout their supply chain.
called for joint legal liability for brand owners if their suppliers breach employment law, said: “Joint responsibility is a step in the right direction but it won’t have the teeth that we would like to see.”
She added that enforcement should not happen behind closed doors, because this meant employees who complained could be left in the dark on whether action had been taken.
“A full joint liability approach also ensures that employees can fully recover compensation and wages owed to them from companies at the top of the supply chain,” she said.
Metcalf said the benefit of joint responsibility was that it could be implemented quickly with little need for new legislation and would encourage brand owners to work in partnership with suppliers.
In a submission to the report, the CBI told Metcalf it welcomed the approach because joint liability was likely to “push the company at the top of the supply chain towards terminating their relationship with the supplier in which the issue has arisen, rather than acting as a positive force for improving working conditions.”
Metcalf’s 135-page report also called for pilots of local licensing schemes for nail bars and car washes, two of the sectors where workers are deemed most vulnerable to mistreatment.
He reiterated calls for introducing a power to embargo “hot goods” produced in factories that underpay workers and for an increase in fines for non-payment of the national minimum wage.
He said companies should be given more guidance by HMRC in order to prevent accidentally underpaying workers, but fines for deliberate breaches should be significantly increased.
“The probability [for a company] of an HMRC minimum wage investigation is only once every 500 years but they are only fined an average twice their arrears. The surprising thing is how many companies comply,” Metcalf said.
He said the government should consider linking penalties to company turnover but said short term they could be raised to five times the amount that companies failed to pay workers.