Compliance and Transparency are Key to Labor Market Enforcement Strategy

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Crawford Temple, CEO – Professional Passport

May 26, 2022





Margaret Beels, Director of Labor Market Enforcement, recently called for evidence to help inform the Labor Market Enforcement Strategy for 2023/24. The main topics she focuses on include evidence of the scale and nature of the threat of labor non-compliance, including whether it varies across the UK, as well as compliance challenges and for the 3 labor market enforcement agencies. the enforcement mandate of HMRC National Minimum Wage / National Living Wage (NMW / NLW), Gangmasters and Labor Abuse Authority (GLAA) and Employment Standards Agency (EAS). Crawford Temple is CEO of Professional Passport, the UK’s largest independent assessor of payment intermediary compliance and he shares his views on what Ms Beels should focus on…….

We have seen a proliferation of regulations and legislation over the past forty years as policy makers seek to catch up with the fast pace of the modern work landscape. This means that a catalog of legislation has led to a series of unintended consequences that have not served the outsourcing industry and the entire supply chain well. The government has ignored expert advice, so the legislation continues to fail to address the underlying issues and challenges facing our industry, namely non-compliance, transparency and enforcement.

Most recently, we have heard a growing number of calls to regulate the industry in response to widely reported instances of non-compliance and malpractice. It’s of course vitally important to the reputation of the whole industry that we speak out against any bad practice, but I don’t think regulation is the answer. Proactive enforcement is, but it just doesn’t happen. As a result, non-compliance and illegal practices are allowed to flourish, costing the Treasury around £1billion a year in lost revenue.

As compliance becomes a priority, it has never been more important for everyone in the supply chain to work together to develop good working practices. We know there are cases of bad practice among a minority of companies that have made headlines, but there are also a large number of highly compliant organizations that work ethically and correctly to provide quality service. high level to customers and subcontractors.

visible app
While enforcement is expensive, without it there is little incentive to follow the rules and arguably the lack of enforcement to date has fueled the incentive that has allowed non-compliant providers to thrive. And, with the introduction of a single enforcement body comprising the Gang Masters Labor Abuse Authority, the Employment Agency’s Standards Inspectorate and HMRC Ms Beels must ensure that enforcement does not become no more diluted as departments figure out how best to solve problems together. Current application policies do not work. They serve to incentivize non-compliant offers and fail to support compliant parts of the industry. The lack of visible enforcement, the long delays in taking any action, and the targeting of workers for recovery all serve the interests of those seeking to circumvent or ignore the rules.

Coupled with a series of ongoing rule changes such as non-payroll compensation legislation which extended its reach in April 2021 to the private sector, the incentives for abuse have become even more significant and issues that have recently made headlines. diaries regarding paid vacations, skimming, mini-umbrellas and disguised pay schemes are the end result.

Act on existing data
HMRC has the appropriate information that would clearly identify non-compliant systems and bring them to a faster close. The Real Time Information (RTI) reports which were introduced in 2013 along with the 2014 Interim Reports provide HMRC with two sets of data which give a unique insight into the market and supply chain. Matching this data should trigger an alert and help HMRC identify a dodgy supplier and take appropriate and prompt action.

Collegial approach
We need joint thinking and all relevant government departments should seek to develop closer relationships with compliance bodies and wider industry bodies.

Compliance bodies in particular are setting their own compliance standards and developing a more structured approach would allow departments to inform and, just as importantly, be informed about market pressure points.

The nature of compliance accreditations allows for faster reactions to market distortions and would contribute to limiting and restricting market access for those applying these “have I got a good idea for you” provisions.

The inclusion of the broader industry bodies provides the widest reach for messaging across the industry and gives decision makers the benefit of designing and then implementing an agreed-upon standard of compliance that works for everyone. Transparency is the most powerful weapon against non-compliance. A collegial approach is the best course of action and I urge Margaret Beels to listen to the evidence and take action to devise a strategy that will work well for everyone across the supply chain working hard to raise standards and get rid of those who perpetually seek to break the rules, behave unethically and do untold harm.

Crawford Temple is CEO of Professional Passport, the UK’s largest independent payment intermediary compliance assessor. In 2021, it publishes a report entitled The Good, The Bad and The Ugly – Addressing Non-Compliance Issues in the Umbrella and Payment Intermediary Industry which outlines a number of short and long term plans that need to be put in place to help build a more open, compliant and orderly market without the need for more legislation and regulation.

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