Government warns bad bosses will be slapped with jail time

25 Jul 2017 By Hayley Kirton

Stern words act as ‘timely reminder’ for employers to check they are meeting legal requirements

The man tasked with heading the government’s crackdown on rogue employers has today warned he won’t shy away from dishing out harsh punishments, including prison sentences.

In an introductory report, Sir David Metcalf, who was appointed director of labour market enforcement in January, proposed examining measures to better tackle illegal practices – such as underpaying minimum wage or breaking modern slavery laws – and make sure large organisations’ supply chains do not breach labour laws, as well as reviewing the effectiveness of current enforcement practices.

“Tackling labour market abuses is an important priority for the government and I am encouraged that it has committed record funds to cracking down on exploitation,” said Metcalf. “Over the coming months, I will be working with government enforcement agencies and industry bodies to better identify and punish the most serious and repeat offenders taking advantage of vulnerable workers and honest businesses.”

One issue Metcalf is particularly focusing on is the use of labour market enforcement undertakings and orders, which came into force last November and carry a prison sentence of up to two years for serious or repeat offenders.

Margot James, minister in the Department for Business, Energy and Industrial Strategy, said: “While the majority of employers create a fair and safe environment for their workers, there are a small minority of rogue employers that break the law and we will use all enforcement measures at our disposal to crack down on labour market abuses.”

James revealed earlier this month that HMRC had found that 98,150 low-paid workers had been underpaid £10.9m between them in minimum wage shortfalls in the 2016-17 tax year.

“If Metcalf is true to his word, rogue employers that are repeat offenders when it comes to matters such as [the] national minimum wage should tread very carefully and it may simply be a matter of time until the law catches up with them,” Keely Rushmore, senior associate at SA Law, told People Management.

“Conversely, most law-abiding employers should have little to fear as a result of his comments. However, it’s a timely reminder for employers to check their compliance with legal requirements, particularly in relation to the national minimum wage, which is a complex area of law and many employers may unwittingly be in breach of its provisions.”

Meanwhile, the Presidents of the Employment Tribunals recently launched a consultation into increases in the Vento bands – the tiers of compensation an employer could be required to pay if they lose a tribunal involving injury to an employee’s feelings.

The bands, which have not been formally adjusted for eight years, currently stand at:

  • £600 to £6,000 for the least serious cases;
  • £6,000 to £18,000 for middle-tier cases; and
  • £18,000 to £30,000 for the most serious cases.

However, the consultation is discussing raising the bands in line with the retail price index to:

  • £1,000 to £8,000 for the least serious cases;
  • £8,000 to £25,000 for middle-tier cases; and
  • £25,000 to £42,000 for the most serious cases.

Calling the review of the awards “overdue”, Rushmore said: “It is imperative that injury to feelings awards are set at a level that truly reflects the hurt and upset caused by discrimination, but at the same time it brings into sharp focus the fact that employers facing discrimination claims are at risk of being the subject of a significant injury to feelings award.”

Both Metcalf’s warning and the Vento band review come shortly after Matthew Taylor published his review into modern working practices, which contained numerous suggestions to boost the UK’s quality of work and improve the tribunal system. The government is currently reviewing the report and will issue a detailed response later this year.

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